Govt. Approved Rs 1300 crore to promote domestic RuPay Debit Cards

Govt. will pay banks a percentage of the value of transactions done via RuPay debit cards.

India approved Rs. 1,300 crore plan to promote domestic RuPay debit cards and low-value digital transactions to boost their use in marginalised populations, in a move that could challenge the clout of rivals like Visa and Mastercard.

According to the Govt. Officials said, "Under the plan, the government will pay banks a percentage of the value of transactions done via RuPay debit cards and low-value direct interbank transactions for a year, backdated to begin in April 2021."

It could lead to threatening the domestic market share of rivals Visa and Mastercard. Earlier this year, Visa complained to the US government that India's "informal and formal" promotion of RuPay was hurting it in one of its key growth markets.

It will cover reimbursement of processing fees on digital transactions up to Rs. 2,000, added Govt. Officials.

Meanwhile, referring the customers outside the formal banking and financial system the Govt. said, "It will also help in making accessible digital modes of payments to unbanked and marginalised populations."

Payments Council of India, an industry body, said the sector would "greatly benefit from this initiative".

Finance Minister Nirmala Sitharaman has publicly asked banks to promote RuPay cards to boost digital transactions in the country.

Mastercard and Visa count India as a key growth market but have been jolted by a 2018 central bank directive for them to store payments data "only in India" for "unfettered supervisory access".

Banks are currently barred from issuing Mastercard-branded cards to new customers after the US payments giants were found to have not fully complied with the data localisation rules.