Despite being a developing country, India is racing ahead to a cashless world.
First-tier global credit-card issuers are being squeezed out of the Indian digital-payments market by local systems built by the National Payments Corporation of India (NPCI).
NPCI’s two homegrown systems—Unified Payments Interface (UPI) and RuPay—are now used in 65% of digital retail transactions, enabling Finance Minister Arun Jaitley to crow that “Visa and Mastercard are losing market share in India.”
UPI helps users send funds from a range of participating banks through a single mobile app. RuPay, akin to Mastercard or Visa, has garnered wide acceptance at ATMs, points-of-sale and e-commerce websites. Their relatively low fees spur adoption. The demonetization drive of two years ago also pushed consumers toward digital payments.
According to NPCI, the amount transacted using UPI increased from $400,000 in 2016 to a whopping $10.5 billion in October 2018. Since RuPay launched in March 2012, it has acquired a network of 1,100 banks issuing more than 500 million cards that racked up 260 million transactions just in July.
“Without the big government push, the payment systems would not have grown so enormously,” says Jithesh P.V., deputy vice president and head of the Digital Centre of Excellence at Federal Bank. “Anyway, there is no room for complacency; global cards will also compete.”