If things work out as planned, India may soon have a domestic payment card system — a rival to multinational card associations like Visa, Mastercard and American Express. The Reserve Bank of India (RBI) is looking into the possibility of a domestic payment card which can handle credit/debit card transactions inside the country.

In its report on ‘Payment Systems in India: Vision 2009-12’, the RBI said it would look into the concept of a domestic payment card (India Card) and a PoS (point of sale) switch network for issuance and acceptance of payment cards. “The need for such a system arises from two major considerations — the high cost borne by the Indian banks for affiliation with international card associations (like Visa and Mastercard) in the absence of a domestic price setter and the connection with international card associations resulting in the need for routing even domestic transactions, which account for more than 90 per cent of the total, through a switch located outside the country,” it said.

As per the RBI Annual Report, the value of credit card transactions were Rs 65,356 crore in 2008-09, a 100 per cent jump in the last three years. This means almost Rs 60,000 crore was settled outside India through Visa and Mastercard — which act as the payment link on behalf of the bank, merchant and card holder — last year. Debit card transactions amounted to Rs 18,547 crore in 2008-09. The Indian Banks Association is also in favour of setting up a payment card.

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