A switchover to Rupay the Indian version of Visa or MasterCard, can help domestic banks save as much Rs 300 crore annually in transaction fees, says the National Payments Corporation, which launched the card last week.
"Adoption of the RuPay Card will help banks save Rs 250-300 crore annually as our interchange charge is cheaper by up to 40 per cent than what banks pay to foreign cards like Visa and MasterCard," National Payments Corporation of India (NPCI) Managing Director and Chief Executive Officer A P Hota told PTI.
After years of preparation and soft launch, NPCI commercially launched RuPay Card on March 26, with major banks such as SBI, BoB, UBI, BoI, Corporation Bank and Axis Bank launching their domestic debit cards on the RuPay platform.
This makes the country second after China to have an indigenous electronic payment card.
Typically, banks pay around 1.8 per cent of the transaction value in interchange charges. This is shared between the payment gateway operators like Visa and MasterCard, the card issuing bank, and the merchant.
While the card-issuing bank charges around 0.25-30 per cent of this, an equal amount is taken in by the merchant too, with the rest being retained by the card company such as Visa.
But Hota said NCPI will retain only up to 60 per cent of this around 1.2 percent, going by the current fee structure.
According to the banks, foreign cards charge around USD 30,000-50,000 as one-time fee and around USD 10,000-30,000 quarterly.
In FY10, according to RBI, domestic banks coughed out Rs 490 crore in interchange charges to Visa and MasterCard.
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