IAS Gyan

Daily News Analysis


16th May, 2023 Economy

Disclaimer: Copyright infringement not intended.


  • The National Payments Corporation of India is looking at various opportunities for tie-ups with global financial service entities to make RuPay cards at par with Visa or Mastercard.

About RuPay

  • RuPay (portmanteau of Rupee and Payment) is an Indian multinational financial services and Payment Service System, conceived and launched by the National Payments Corporation of India (NPCI) in 2014.
  • NPCI conceived RuPay as an alternative to Mastercard and Visa, while consolidating and integrating various payment systems in India. RuPay was launched with an objective of a less cash economy.
  • It was created to fulfil the Reserve Bank of India's (RBI) vision of establishing a domestic, open and multilateral system of payments. RuPay facilitates electronic payment at all Indian banks and financial institutions.
  • All Indian companies with an annual turnover exceeding ₹50 crore are required to offer RuPay Payment options to their customers.


  • RuPay offers debit cards, credit cards, prepaid cards and government scheme cards.
  • Government scheme cards include debit and credit cards, such as the RuPay PMJDY, RuPay Mudra and RuPay PunGrain debit cards, and the RuPay Kisan credit card.
  • It also offers combo cards that offer debit and credit, debit and prepaid, or credit and prepaid features through a single card.

Why was RuPay launched?

  • The proposition of a cashless India was enhanced with the introduction of the RuPay cards.
  • Building a cashless economy requires financial inclusion and RuPay reached rural India and boosted digital payments with the Pradhan Mantri Jan Dhan Yojana scheme.
  • Moreover, with no domestic payments network, banks were forced to pay high affiliation charges to multinationals like Mastercard and Visa for trusted associations. Hence, NPCI was created as a non-profit payments company to construct an affordable and accessible payments network for Indians.
  • From 15% in 2017 to over 60% in 2020, RuPay’s Indian market share has accelerated.

International Presence

  • Presently, RuPay cards are accepted at points of sale (PoS) machine powered by Discover of the US, Diners Club, JCB of Japan, Pulse and Union Pay of China.
  • In March 2012, RuPay collaborated with Discover Financial Services to bring international services to Indians.

Benefits of a Rupay Card

  • Being a domestic framework, banks issuing RuPay cards are at an advantage as they are not required to pay network registration fees unlike in the case of a Visa or MasterCard registration.
  • With a zero merchant discount rate (MDR), banks have also agreed to charge nothing on UPI and RuPay card transactions. This has made RuPay transactions preferable while also stimulating FinTechs to innovate and provide better payment products to customers because of the ease of UPI and RuPay payments framework.
  • It also has a greater reach in rural areas. Under the PMJDY scheme, free RuPay debit cards were given to all bank account holders. As all processing of transactions happens in the country, there is also a lower settlement cost.
  • RuPay has both debit and credit cards for individuals, corporates, and prepaid cards; there’s a ‘Kisan Credit Card’ available as well. There’s also a ‘contactless’ card that facilitates transactions on a single tap, making payments without disclosing crucial card details.


  • The National Payments Corporations of India (NPCI) is an umbrella organisation launched in 2008 by the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007.
  • The National Payments Corporation of India (NPCI) is a not–for–profit organization that promotes and facilitates the adoption of electronic payments in India.
  • The NPCI, owned by a consortium of banks, is aimed at creating robust payments and settlement systems.
  • NPCI is promoted by ten major banks, including the State Bank of India, Punjab National Bank, Citibank, Bank of Baroda, and HSBC. In 2016 the shareholding was broad-based to 56 member banks to include more banks representing all sectors.
  • Payment systems that the NPCI can operate include National Financial Switch (NFS), Immediate Payment System (IMPS), Aadhaar-enabled Payments System (AEPS) and National Automated Clearing House (NACH).
  • NPCI has also launched products including RuPay, Bharat Bill Payment System (BBPS), Bharat Interface for Money (BHIM), and Unified Payments Interface (UPI). UPI has been termed as the revolutionary product in the payment system.

What are the services that NPCI provides?

  • Through various FinTech innovations, the NPCI has contributed to India’s current payment ecosystem in a big way. The following are some of its prominent services:


  • United Payments Interface )UPI) is a real-time payment solution that links bank accounts with UPI platforms on mobile phones.
  • It eliminates the need for a third-party wallet and enables the direct transfer of money from one bank account to another.
  • Currently, UPI services are integrated with over 120 banks. Consumers can also use UPI for P2P transfers to family and friends.

Bharat Interface for Money (BHIM)

  • BHIM is an app that runs on UPI. It allows users to easily make payments by using just a registered mobile number or a virtual payment address (VPA).
  • Though BHIM is not as widely used as some of its competitors like Google Pay, it offers a vast scope for financial inclusivity for citizen across India. This is because BHIM can be operated offline and does not require a smartphone. BHIM leverages NPCI’s *99# facilities–more on that below.

*99# or USSD services

  • NPCI’s *99# services run on USSD, which stands for Unstructured Supplementary Service Data.
  • These services aim to bring traditional and newer banking solutions to citizens of India who may not have smartphones, internet or even traditional bank accounts.
  • It aims to leverage as much of mobile banking as possible and works on low-value remittances so that more citizens can become integrated and familiar with banking services.


  • Now a part of the government’s Jan Dhan Yojna, RuPay is another big initiative of the NPCI that has influenced the way the average citizen makes financial decisions.
  • RuPay is essentially a more affordable version of international debit and credit cards. These cards are issued as prepaid cards, debits cards and credit cards, as per the customer’s requirements. As of now, over 300 million RuPay cards are in circulation across India. More and more consumers are using RuPay for PoS and E-commerce transactions too.


  • IMPS stands for Immediate Payment Service. This system works around the clock and offers the ability to transfer funds instantly. It is because of IMPS that current innovations like UPI are possible.
  • Unlike NEFT and RTGS, IMPS does not rely on traditional banking hours nor does it adhere to public holidays.
  • With payments occurring through smartphones, all consumers need is the beneficiary’s mobile number to initiate the process.
  • Of course, other payment details such as bank account number and IFSC codes can also be used to conduct an IMPS transaction.


  • BBPI stands for Bharat Bill Payment Interface. Recognizing how vital bill payments are to the retail payments industry, NPCI developed BBPI to facilitate the same.
  • BBPI is all set to function as the single platform that consolidates payments for bill payers and aggregators.


  • The NPCI is taking strong steps to create a cashless India. By offering services that strive to make payments and financial transactions much easier for customers, saying that India will have a strong digital payments ecosystem used by citizens from all walks of life is not a stretch of the imagination.
  • The NPCI, within its 10 years of existence, has already influenced India’s financial sector by creating payments ecosystems that strive to benefit the end consumer. With the RBI backing it up and a great list of core banks working in tandem with its policies, the NPCI will surely continue to influence various financial norms and consumer expectations in the years to come


Q. The National Payments Corporation of India (NPCI) is taking strong steps to create a cashless India. What are the features of NPCI? Throw light on the services that NPCI provides.