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A payment card scheme called India Pay could launch in that country in two or three years, an Indian banking official says. The scheme would provide an alternative to the large international card brands in India's largely untapped card market. India's large public-sector banks, with support from the Reserve Bank of India, the country's central bank, are working to establish the scheme, billed as the "common man's way to pay," says R.B. Barman, the former Reserve Bank executive director still involved in the project. He spoke this week at the European Financial Management and Marketing Association's Cards & Payments conference in Paris. Indian banking officials previously discussed plans for India Pay but offered few details about when it would launch (CardLine Global, 23 April). Still, the goal of launching in two to three years would present a "challenge," Barman said at the conference. To get started, project backers would have to complete such work as setting up clearing and settlement systems and distributing point-of-sale terminals, he said. Visa Inc., MasterCard Worldwide and American Express Co. handle nearly all of the domestic and international credit and debit transactions in India, Barman said. "We want to have our own credit and debit card brand," he tells CardLine Global sister publication Cards&Payments. "It should have wide reach. Banks should push it to the common people," including poor and middle-income consumers. Barman says. The National Payment Corp. of India, a not-for-profit company with capital of 3 billion rupees (US$66 million or 47.3 million euros), would own the scheme. Public-sector banks would own at least 51% of the corporation and issue the cards. India Pay would win card business by charging lower interchange rates than the international schemes and by delivering some government benefits via cards, Barman predicted. But unlike China, where the government established card network China UnionPay and placed restrictions on international card companies handling domestic transactions, India's domestic card market would remain "nondiscriminatory," he said. The new scheme would appear unlikely to establish a debit or credit card infrastructure in the broad swathes of poverty-stricken India, where villages often do not have electricity. But India Pay could reach smaller cities, along with larger urban areas where the international schemes operate, Barman said. The credit cards the India Pay banks issue could be co-branded with an international card scheme, mainly for foreign transactions. India Pay also could expand overseas, as China UnionPay has done. As of March, India had some 123 million debit and credit cards in circulation, which amounts to little more than 10% of the country's population, Barman said. Credit cards accounted for 70% of card transaction value, which increased by 40.2%, to 579.8 billion rupees in the year ended in March from 413.6 billion rupees the previous year.
