Rupay, Indian’s domestic card network: the new kid on the block

26th June 2018
Sarah Midgley

While most in the U.S. and Europe look on with amazement at the growth of native mobile wallets like WeChat and Alipay in China, Rupay’s rise in India has been quiet but staggering and offers usable insights for Western merchants.

Rupay was launched in 2012 as a domestic Indian card network by the National Payments Corporation of India (NPCI), to compete with Visa and Mastercard. It is one part of India’s wider initiative to digitalize the Indian economy, along with the recent high-profile de-monetization of all high value bank-notes.

Since Rupay’s introduction, total point of sale debit transactions have increased from approximately 31 million transactions per month, to nearly 350 million1. Of those 350 million, Rupay is the second largest card network, and expects to become the dominant network in less than 2 years. Rupay currently has over 700 issuers using its settlement and clearing system, phasing out expired international brands. Rupay is also in the early stages of issuing credit cards and shares a parent organization in NPCI which sets the mobile banking standards behind the explosion of digital wallets like Paytm and Tez in India2.

In response to this, Visa is reported to have slashed the cost of using its network to both processors and issuers by as much as 95% in some instances3. Although India’s regulation of the total merchant service charge (a.k.a Merchant Discount Rate) may prevent it from being passed onto merchants, it is clear that big changes can come as a result of strong competition.

Rupay doesn’t only have its sights set on domestic usage; last month, Prime Minister Narendra Modi was in Singapore promoting its use internationally4. Rupay has signed reciprocal agreements with Discover which makes Rupay available wherever Discover/Diners is accepted. For a merchant in the right vertical, understanding this could provide significant incremental sales, mimicked by some who have benefited from advertising UnionPay or Alipay acceptance. Unfortunately, the case for eCommerce is a little more complex as India mandates the use of a one-time password system not widely supported outside of India.