By Elton Gomes
The largest card payment network in India, Visa, has drastically reduced the charges it levies on debit card transactions.
Visa made the announcement via a note that was circulated around member banks. The payments network said that it would slash rates on debit card transactions by 95%. More importantly, the largest reduction would be on transactions under Rs 2,000. The decrease in rate will come into effect from July 1 onwards and could be a huge boost to digital payments in India by bringing in small merchants.
A spokesperson for Visa told the Economic Times: Visa has revised its data processing fees to encourage everyday digital payment usage across consumer and merchant categories.
The spokesperson added that the move in is line with the mission to expand digital payments in India, This will not only help drive the adoption of debit card payments among consumers but also assist client initiatives towards expanding digital payment infrastructure in support of the Digital India programme.
After demonetisation took effect in November 2016, India saw a surge in digital payments. The government now aims to grow Indias digital economy to $1 trillion by 2022. Visas initiative to cut rates is likely to rope in more customers and small businesses.
Why is this important
T.R. Ramachandran, group manager at Visa, said in a statement: The study shows that while consumers are steadily embracing digital payments, they are also seeking secure payment forms, as reported by PTI.
Visas move to slash rates could be significant considering that many Indians are looking to switch to digital payments. Moreover, the reduction in rates could give stiff competition to domestic players like RuPay. In April 2018, RuPay was all set to dominate the Indian card market and overtake Visa and Mastercard in volume and value of transactions complete.
With more than 1,000 banks issuing debit cards, digital payments have become the go-to option for many and with a slash in debit card transaction rates, more people are likely to apply for debit cards.
Elton Gomes is a staff writer at Qrius