In a big boost to digital transactions in India, the country’s largest card payment network, Visa, has slashed the charges levied on debit card payments by up to 95%. This move is aimed at bringing more small merchants and customers into the company’s digital transaction system. On a broader level, this move is expected to boost the country’s digital payment market significantly.
The announcement was circulated in a note to various member banks in the country. According to the circular, Visa would slash the charges on debit card payments by up to 95%. As per the revised rates, the charges for transactions under Rs.2,000 will drop down to just 15 paise. For transactions above this limit, a standard charge of Rs.1.5 will be applicable. This change will come into effect from July 1, 2018 onwards. Under the existing structure, all transactions are charged a flat rate of Rs.2.99.
Resistance to card payments has been witnessed among small merchants in many places across the country. Following this reduction in charges, it is expected that small merchants will be more inclined to accept debit card payments from their customers. Moreover, this move will make it easier for banks to set up digital payment terminals at small shops across the country.
One of the reasons for Visa’s decision to bring down the transaction charges has been attributed to increasing competition from RuPay, a card payment scheme that offers services at lower charges. RuPay is growing in the market through partnerships with various banks. Paytm, for instance, is providing RuPay debit cards for its customers.
As of now, Visa commands over 40% of the market share when it comes to card payments in India. It is reported that 96% of these transactions are debit card transactions. However, in terms of value, credit cards account for 51% of card payments. Lower charges on transactions could help the company gain further access into the domestic digital payment ecosystem of the country.