Bengaluru: With an aim to increase the small merchants and customers into its fold, Visa – the largest card payments network in the country, has lowered down the fee on the debit card transactions. Visa circulated a note among the member banks recently regarding the same which read that the transaction charges on debit card will be lowered down by up to 95 per cent.
Calling it a move to encourage everyday digital payment usage, a spokesperson for Visa said that this will not only help drive the adoption of debit card payments among consumers as well as clients will get assistance in expanding digital payment infrastructure which would support Digital India programme.
According to industry estimates, 40 per cent market share in India in terms of the number of card transactions is commanded by Visa.
From July 1, the charges applicable to card issuing banks for transactions under Rs. 2,000 will fall down to 15 paise from 45 paise and from Rs. 2.99 per transaction to Rs. 1.5 per transaction for higher-value payments. However, the service fee has been increased from 0.035 per cent to 0.055 per cent of the transaction.
As of now the new charges will be only for domestic debit card transactions.
The decision of reduction in fee by Visa is seen as a step to tackle the competition from RuPay – homegrown card payment scheme. RuPay is offering cheaper rates which are 90 paise per debit card transactions. Notably, Rupay is being run by National Payments Corp of India.
It should be noted that Paytm is exclusively offering RuPay debit cards as well as many payments bank and small finance banks have already partnered with RuPay for their card offering.
With RuPay credit card the competition in the digital card transactions becomes intense.
With reduction in charges on digital payments by Visa banks will have higher share of charges on digital payments.
A target of $30 billion has been set by the government for this financial year. However, till now the merchants have been reluctant from accepting car payments due to high charges and it becomes even more difficult for small merchants. Though with the reduction in the fee, for which government prompted in December, might come at a rescue for them.