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The Almighty Buck

India's Payments Push is Cutting Out Visa and Mastercard (techcrunch.com) 36

Posted by msmash from the taking-matter-into-hand dept.
India's homegrown digital payments ecosystem, anchored by two systems, is challenging Visa and Mastercard's dominance in the world's most populous nation. The backbone is UPI, a nine-year-old bank-to-bank payment network that processes over 13 billion monthly transactions through QR codes and phone numbers, accounting for 71% of all transactions and 36% of consumer spending, according to Bernstein.

RuPay, India's domestic card network, has leveraged its exclusive right to process credit card transactions through UPI to double its volume to $7.43 billion in fiscal 2025's first seven months. It now represents 28% of credit card transactions, up from 10% last year. Small merchants are adopting the system as RuPay only charges fees on transactions above $23.3. India's central bank has also mandated banks let customers choose their card network, ending exclusive deals with global providers.

India's Payments Push is Cutting Out Visa and Mastercard More | Reply

India's Payments Push is Cutting Out Visa and Mastercard

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  • Fees (Score:3)

    by rossdee ( 243626 ) on Friday January 10, 2025 @09:14AM (#65077853)

    RuPay only charges fees on transactions above $23.3.

    Not sure if that got converted right - How do they make any money if most of the transactions don't incur a fee?

    • How do they make any money if most of the transactions don't incur a fee?

      The cost of processing any of these transactions infinitesimally small. If they charge 2% of all transactions over 2000 rupees and let's just say there are a billion transactions per month over that limit (a small percentage of the total transactions processed) and they average 3000 rupees, they are making 60 billion rupees per month (nearly 700 million USD/mo). They're doing OK.

    • Re: (Score:2)

      by nucrash ( 549705 )

      While a large majority of transactions go uncharged, there is likely enough larger transactions to fund the system to the point where it's profitable. It sounds crazy but it's a version of the American tax system where the lowest portion doesn't get taxed or gets enough of a refund that the tax no longer applies to the person yet at the same time the people in higher income brackets effectively fund the government.

      Is it a good system? That's questionable. Is it a fair system? I think so.
      You don't have t

    • The underlying UPI transaction cost is fractions of a U.S. penny, so they can eat the many small transactions and take a much smaller fee than MC/Visa on larger transactions and still come out ahead. The MC/Visa payment monopoly gravy train is coming to an end. This is going to happen around the world and the last place on earth paying ridiculous transaction fees will be the U.S.
      • The last place on earth paying ridiculous transaction fees will be the U.S.

        Yes, but the US will happily pay double to make up the shortfall in the rest of the world.

      • Re: (Score:2)

        by tlhIngan ( 30335 )

        The underlying UPI transaction cost is fractions of a U.S. penny, so they can eat the many small transactions and take a much smaller fee than MC/Visa on larger transactions and still come out ahead. The MC/Visa payment monopoly gravy train is coming to an end. This is going to happen around the world and the last place on earth paying ridiculous transaction fees will be the U.S.

        Not likely.

        The fee is much smaller because the network is much smaller and controlled by a single entity. Think of it as say, Payp

  • RuPay only charges fees on transactions above $23.3.

    I'm going to give the benefit of doubt here and say that somebody wrote this rather than saying 2000 rupees because Slashdot STILL cannot handle Unicode and show the proper currency symbol, but damn, it's still laughably US-centric.

    And I say that as a pretty jingoistic American.

    • Re:Fees above what now? (Score:4, Informative)

      by Luthair ( 847766 ) on Friday January 10, 2025 @09:20AM (#65077869)
      Not really. Most people on the planet have no idea of the relative value of a rupee to their own currency whereas USD or Euro people will have a general sense.

      As a Canadian I'd say there are only 3-4 globally relevant currencies: USD, Euro, Yen, GBP.

      • Re: (Score:3)

        by Entrope ( 68843 )

        Sure. That's why it is customary to write something like "2000 rupees (23.3 US dollars)". But the threshold is denominated in rupees, and when the exchange rate changes by 0.3%, it wil be wrong to say the threshold is $23.3. 0.3% is less than the one-week variation shown at https://www.xe.com/currencycha... [xe.com] .

      • Re: (Score:2)

        by vbdasc ( 146051 )

        No Renminbi?

      • Re: (Score:2)

        by rossdee ( 243626 )

        What about the Yuan (or however you spell the Chinese currency)

        • Re: (Score:2)

          by Luthair ( 847766 )
          Perhaps businesses dealing with china know (but they probably just use USD), but when was the last time you saw a broadcast which mentioned an exchange rate vs the yuan? Personally I've never seen it, whereas the yen has been a fixture (though its likely much less relevant today)

  • The fees charged by Visa & Mastercard are obscene.

    Nuff said.

    • Whoops.

      Missed out one word: Merchant.

      Sorry.

      • Absolutely. No significant costs to handling cash, making cash deposits, or reconciling the accounts. Certainly no great expense to accepting checks, verifying funds, depositing them, or reconciling the accounts. And no real impact waiting for antiquated ACH to transfer funds, nor your bank to pay you. Electronic payments are instantaneous.

        • That's the thing, in the UK for e.g. most payments are now contactless, so none of the above applies.

          Merchants do charge a little extra, to cover the card charges, but that's OK. At least we, in the EU/UK aren't required to tip for appalling service.. :-)

  • Can we get some of that here? (Score:4, Interesting)

    by alvinrod ( 889928 ) on Friday January 10, 2025 @10:13AM (#65078005)
    Visa and Mastercard are some of the worst companies on the planet. I'd like it to see more of these companies available in the U.S. and I won't shed a single tear when the entrenched players go out of business.
  • ...do you get an American rep? What are the fee percentages for Visa/MC? More and more places in my little part of the world are starting to "charge" for using your credit card.
  • I mean, seems like enabling commerce through issuance of currency is a basic function of government. It's kind of weird how they don't.

  • Big Story with Little Fanfare (Score:3)

    by nucrash ( 549705 ) on Friday January 10, 2025 @11:15AM (#65078137)

    I see this as a big story that will likely slide under the radar until it's too late. The summary should be that American processors need to get off their ass or risk losing access to 1.5 billion customers. That's just if RuPay stays confined to India. If it integrates with BRICS and works to supplant the U.S. Dollar, that would likely weaken the U.S. market share.

    • Any country with the ability to handle financial transactions domestically is crazy not to do so.

    • Re: (Score:2)

      by PPH ( 736903 )

      No. We are pretty much locked in to US banking by regulations [wikipedia.org] which punish foreign entities from providing us their financial services. No foreign bank in their right mind would offer you payment or credit services unless they enjoy our IRS crawling through their records.

      These laws and regulations are not enforced against US persons. They apply to the foreign organizations. So the average US citizen isn't even aware that we live within a strict capital control regime.

    • Re: (Score:2)

      by Cyberax ( 705495 )

      If it integrates with BRICS

      Russia and China already have homegrown payment systems that are cheaper than VISA/MC: MIR and UnionPay, respectively.

  • This will make India far less appealing as a tourist destination for those with the necessary wherewithal.

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