National Payments Corporation of India (NPCI), a RBI backed company specializing in payment gateways has announced reduction on charges on its RuPay branded debit cards. New interchange rates on RuPay card would be 0.45% on transactions upto Rs. 2000, while for larger transactions, the rate would be 0.65%.
This is done to incentivise the use of RuPay platform by smaller cities and rural areas. NPCI faces tough competition from global payment giants Visa Inc. and MasterCard, who issue a vast majority of debit cards in the country. With only 11 lakh Rupay branded cards primarily in rural areas.
Earlier RBI had dictated banks to cut down transaction charges on debit card to increase their usage. However Visa and Mastercard continues to charge prevalent charges, causing rift of profit for bank which issues card and the bank that installs the point of sales terminal. RBI also directed banks to remove the difference in charges on debit card and credit card, with debit cards having a lesser charge.
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