India’s Prime Minister Narendra Modi recently spent a two-day state visit to the Kingdom of Bhutan to meet with with Bhutanese leaders led by Prime Minister Dr Lotay Tshering. The visit further strengthens bilateral ties through the signing of nine (9) Memorandum of Understanding (MoU). The agreements signed by the leaders of the two countries included the launching of the RuPay Card, India’s proprietary card payment system.
To officially launch the credit card payment scheme, PM Modi made the first RuPay purchase at Simtokha Dzong, one of the dzongs in Bhutan which currently serves as the country’s administrative and monastic centre.
The RuPay card payment system, owned and operated by the National Payments Corporation of India (NPCI), enables Indian RuPay card holders to make purchases by way of credit and debit cards, as an alternative to the Visa and Mastercard international card payment schemes. The launching of RuPay in Bhutan makes the country the second nation, after Singapore, in which citizens in both countries are empowered to use a RuPay credit or debit card for seamless, cashless purchases.
The MoU signed by the two leaders include a standby swap arrangement involving an additional $100 million made available to Bhutan in meeting the related foreign exchange requirements.
The deployment of the RuPay card payment system in the Kingdom of Bhutan will transpire in two phases. The first phase entails the issuance of Rupay Cards by Indian banks, to qualified Indian nationals, which they can use during their visits to Bhutan. The second and final phase will be carried out by Bhutan banks in which RuPay cards will be issued to qualified Bhutanese citizens for their sojourns in India.
About India’s RuPay Card Payment System
RuPay card scheme was the project conceived by the NPCI in fulfilling the Reserve Bank of India’s (RBI’s) vision to have a locally operated open and multilateral payment system. The goal is to provide Indian nationals with a credit payment facility that charges lower processing fees than the card payment systems offered by Visa and Mastercard.
The RBI through its 2009-2012 vision stated that the need for such payment systems in the country arises from the high cost of affiliation that Indian banks have to bear in order to obtain accreditation with international card companies like Visa and Mastercard. As a result, even domestic credit card transactions that account for more than 90% in India’s market were being routed outside of the country.
Rupay processing fees for credit transactions are 23% lower than those charged by the companies behind the two leading international credit cards. The NPCI collects only 60 paise from the acquiring bank and 30 paise from the bank that issued the RuPay card
Backed by 10 leading banks, 6 of which are public-sector banks that include the Bank of Baroda, Canara Bank, the State Bank of India, Punjab National Bank, Bank of India, and the Union Bank of India; two (2) private-sector banks represented by HDFC Bank and ICICI Bank ; and two (2) foreign banks, namely Citibank and HSBC.
Presently, the NPIC has issued 64 million Rupay Global Cards released between 2014 and March 2019.
Amazon for one, which has an India branch makes it possible for Indian online consumers to stay active members via RuPay cards, especially during the holding of the online store’s annual Amazon Great Indian Sale.