Several Founders, Co-Founders, CXO Bankers, CXO Fintech professional & people who participated in the ePanel discussions:
- Mr. Shashank Kumar, Co-Founder at Razorpay
- Mr. Rahul Dayal, Senior Vice President & Head-Business Solutions Group Liabilities, cards & BI, RBL Bank
- Mr. Ratnakar V, former DVP Rural Lending & Payments, Axis Bank
- Mr. Sundeep Bhalla, Senior Vice President & Head, Corporates & Institution, West, Vay Networks India Pvt. Ltd.
- Mr. Neeraj Chandra, Head of Operations & Technology, Abu Dhabi Commercial Bank
- Mr. Anil Shenoy, Director and Risk Management, First Data Corporation
- Mr. Atish Shelar, Head – Acquisition/Business Development, Indiaideas.com Ltd.
- Mr. Abhishek Arun, Senior Vice President, Paytm
- Mr. Venkat Ramana Raj, Regional Sales Head, Haritha Automation Pvt Ltd
- Mr. Vikas R Panditrao, Advisor, Forum of Industry Academic Knowledge Sharing (FIAKS)
- Many other CEO/CXO Bankers & Fintech professionals on FIAKS Forum who requested to remain anonymous
RuPay is India’s indigenous card scheme created by the National Payments Corporation of India (NPCI). It was conceived to fulfill RBI’s vision to offer a domestic, open-loop, multilateral system which will allow all Indian banks and financial institutions in India to participate in electronic payments. It is made in India, for every Indian to take them towards a “less cash” society. (https://www.rupay.co.in/)
RuPay is being used quite extensively in India. In fact, an article in the economic times suggested that RuPay is scaring the international brands like Visa and Mastercard – RuPay: How a six-year-old card gave the scare to global biggies such as Visa and Mastercard. It said –
“Slowly and steadily, RuPay card has been expanding in the Indian market, riding on the back of the government. Thanks to PM Modi’s policy of financial inclusion, RuPay has made quick inroads into the hinterland. “
This article brought up a lot of questions in the minds of the FIAKS community members. Some of them are –
Question 1: Can RuPay compete with Mastercard and Visa in India in terms of the market share of debit/credit?
Question 2: What are the other RuPay-like success stories in other geographies?
Question 3: How will RuPay win over lack of promotions (which is one of the biggest differentiators)?
In response to the first question, a few experts said that the 2 things that are required to compete with Mastercard and Visa are people who understand the industry & business and technology that is comparable to Mastercard and Visa. Rupay has both of them.
RuPay claims to power over 500 million cards issued by nearly 1,100 banks – giving it more than 50% share in the country’s debit-card market by volume, beating the much older duo of Visa and Mastercard. RuPay cards are already the No. 1 scheme in the number of cards issued and will become the No. 2 scheme on value and volume done on PoS (Point of Sale) machines. So clearly RuPay is already ahead of Mastercard and Visa in terms of market share, value, and volume.
So RuPay has everything it needs to beat both these giants but they also need some financial freedom which they currently don’t have. This is in regards to Scheduled Commercial Banks only.
Coming to the second question, Amex in China is a great success story even though they have tied up with a local player. There are 8 other countries with the domestic card system, RuPay is the 9th one. Some of the other payment card association brands include China UnionPay, Visa, MasterCard, American Express, Discover, Diner’s Club, and JCB.
Then the 3rd question was answered by some of the experts. When it comes to winning more customers despite the lack of promotions, RuPay has some good moves under its sleeve. And once the credit cards of RuPay hit the low tier areas, they would not require any additional promotion because Visa and Mastercard cannot compete there. So RuPay just needs to penetrate in the depths of the Indian geography, after that they will not need any promotions.
There were some members who had a different view on the matter. It was believed that the biggest challenge for RuPay is brand positioning as getting more customers is also about brand perception and brand positioning. Most HNIs (High Networth Individuals) will not use RuPay. Getting them to use it requires brand positioning, advertising, offers, and tie-ups. All of this requires focused efforts. RuPay is also behind Mastercard and Visa when it comes to the credit side of it because it is a late entrant.
They also have low financial power as they operate as a Non-profit organization and there is a policy that says that they can’t directly advertise their products so they have to depend on the banks to get exposure and advertisements.
So, since the HNIs or anyone for that matter doesn’t directly apply for Mastercard or Visa and go for whatever is pushed by the banks, RuPay can easily compete with these brands and come out ahead if the offers are good. This means that essentially, the success of RuPay is linked to the banks. And since consumers see the card features and that is pretty much decided by the issuing banks and not the scheme, it’s really about the scheme marketing to the banks and not the banks marketing to the consumers. Hence, the schemes need to be separated from the issuers.
Rupay has a reasonably good offering in the platinum card. However, none of the issuers have positioned it as a premium product.
A member believes that the only difference between RuPay and these brands is the promotional budget. The member banks on the board of the NPCI needs to provide an answer or the Government needs to allocate funds if they want RuPay to succeed.
When the discussion came to the government, a member commented that Rupay was India’s answer to Mastercard & Visa. Hence, the Prime Minister himself was promoting it. Like the financial inclusion targets, RBI needs to set targets for each bank. If the targets are not met then there should be no fresh approvals.
Also, the member agrees with Mr. A. P. Hota that if more NPCI-like institutions are to be floated into the market then it can’t be decided by the market. RBI needs to take a lead here again (RBI should drive the initiative to set up new NPCI: former MD Hota).
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