RuPay Is About To Destroy Visa, Mastercard’s Monopoly – 5 Hardcore Financial Facts

Almost half of all debit cards in India right now by RuPay, which is just 6-years old. Visa and Mastercard should indeed worry.

RuPay is about to end Visa, Mastercard's monopoly
RuPay is about to end Visa, Mastercard’s monopoly

Visa was established in 1958; Mastercard in 1966 and American Express in 1850. Ever since the concept of debit and credit cards came into existence in India (somewhere between 1986-87), these three cashless payment processing companies had enjoyed an uninterrupted monopoly.

And the reason? There was no other company.

However, with the introduction of Make in India card payment platform RuPay, everything changed. In the last 6 years, ever since RuPay came into existence, the market dynamics of the payment processing industry has undergone massive change.

Such has been the impact, that Visa and Mastercard had to complain to US Govt., regarding RuPay, and how it has eroded their market share from India.

In their complaint to Office of the United States Trade Representative (USTR), Mastercard said that PM Modi “associated the use of RuPay cards with nationalism, claiming it serves as ‘kind of national service’.”

Days after this, Finance Minister Arun Jaitley confirmed that Visa and Mastercard are indeed losing out to RuPay, which is backed by National Payments Corporation of India, a Govt. entity.

Why Visa and Mastercard and American Express are concerned and worried about a late entrant to this business? What has 6-year old RuPay done which has shaken their decades-old monopoly?

The numbers never lie. And this is why, we are presenting 5 hardcore financial facts, which prove that the monopoly of Visa and Mastercard is about to be demolished by RuPay:

Total Volume Of Cashless Transactions

Together with UPI, which is the digital payment platform from NPCI, RuPay has witnessed a meteoric rise in usage, all across the nation.

As of August, a total of $51 billion was transacted using cashless mode, out of which RuPay processed Rs 8,430 crore ($1.16 billion) of transactions, and UPI processed Rs 59,800 crore ($8.26 billion) of transactions.

Immediately after demonetization, the share of RuPay was mere Rs 1100 crore, and in UPI was just Rs 50 crore.

Overall, this year, RuPay processed cashless payments of Rs 16,600 crore, which is 180% more than 2017, when Rs 5,934 crore worth of transactions was processed by RuPay.

This sudden increase in usage of RuPay and UPI by Indians shows that Visa and Mastercard are losing their edge in India, and their market share is eroding fast.

Total Number Of Cards Issued

As of now, total of 925 million debit cards are in usage in India; out of which, almost 50% or 500 million are RuPay cards.

In 2013, RuPay’s share was just 0.6%!

Within 5 years, RuPay’s share in debit cards has increased from virtually 0 to 50%; and this is the biggest worry for Visa and Mastercard.

Banks Which Are Issuing Debit Cards

Before RuPay, only 32 banks issued debit or credit card for their customers, as Visa/Mastercard/AMEX had limited this number as part of their monopoly strategy.

But now, 1100 banks can issue their own RuPay powered debit cards, which can exponentially increase its usage, and adaption by rural Indians.

This is another big reason to worry for Visa and Mastercard, as now, they have no control over banks who can issue debit cards. This means lesser margin and lower profits.

Usage Of RuPay Cards At PoS

Earlier, only Visa, Mastercard or AMEX was accepted at Point of Sales terminals by merchants. But now, RuPay is changing the equations.

During 2017-18, RuPay powered debit cards were used across 459 million transactions at PoS terminals, pan-India. This is an increase of 135% compared to 2016-17, when only 195 million transactions were processed by RuPay cards.

This 135% increase in usage of RuPay cards means a direct loss for Visa, Mastercard, and AMEX. As if their market has been snatched by RuPay suddenly, without any warning.

Usage Of RuPay At Ecommerce Portals

Not only offline merchants, but online shopping too has embraced RuPay with full force.

In 2018, a total of 208 million transactions was completed across ecommerce portals using RuPay powered cards. This is an increase of 137% compared to 2017, when only 87.5 million transactions were done using RuPay.

This means that RuPay is conquering both online and offline market of Digital India.

No wonder that as a last resort, they had to ‘complain’ to US Govt.

As per NPCI, RuPay is about to dislodge either Visa or Mastercard to become #2 player in this niche, and very soon, they will be #1 player.

In April, Dilip Asbe, chief executive at National Payments Corporation of India (NPCI) had said, “We (RuPay cards) are already the No. 1 scheme in the number of cards issued. This year, we will become No. 2 scheme on value and volume done on PoS machines and ecommerce. So we will not be number 3 anymore behind Visa and Mastercard. We will pip one of them to become number 2. I don’t see a reason why we should not be Number 1 in couple of years, in both value and volume,”

It would be interesting to observe, how Visa, Mastercard, and AMEX attempts to save their market share, and give a tough fight to RuPay.

Related: 3 Reasons Why RuPay May End The Monopoly Of Visa, MasterCard In Payment Gateway Solution

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