Indian Banks’ Association (IBA), the representative body of banking industry, is busy in preparing the outline of a business plan to create IndiaPay, a national card payment settlement company, representing an image of future possibility which will India’s answer to global players Visa & MasterCard.
“IndiaPay would provide national infrastructure for all card-based electronic transactions. It will benefit us with minimum cost while allowing a wider reach,” Sanjay Sharma, chief technology officer, IDBI Bank, said.
Sharma, who is also the convener of the IBA sub-committee, has been assigned a task to prepare a business plan. India is one of the fastest growing credit and debit card markets for these global payment agencies. He feels that by creating a national payment infrastructure, Indian banks would save large amount of money paid as fee to Visa and MasterCard.
The Reserve Bank of India on January 16, 2008 (till November 2007), released provisional figures, according to which India had about 2.5 crore credit cards doing the transactions worth Rs 36,661 crore.
In India there are more than nine crores debit cards doing the transactions of about Rs 7,827 crore. As all these cards either have Visa or MasterCard association, every single transaction involves a small fee to be paid to them.
“While we do not have the exact amount paid by Indian banks annually as fee, we have reasons to believe that it is very high,” Sharma said.
His sub-committee is expected to prepare a business plan in the next couple of months to put up before the IBA Managing Committee, which will then get an approval from RBI.
“Similar national payment systems are operating in other countries of the World like China has China Union Pay,” Sharma said. About the company structure, he said that it can either have an independent structure or can be outsourced.
“All banks will be stakeholders in the company, which will ensure that large volumes drive down cost and even the smallest bank could benefit,” he said.