Banks cheer RBI move for domestic payment gateway

Monopoly position enables international behemoths Visa and MasterCard to levy exorbitant costs on client banks; a domestic payment system would be considerably cheaper

The country’s central bank, the Reserve Bank of India (RBI), is considering putting in place a domestic card payment system that would handle all debit or credit card transactions in the country. If implemented, the new system would compete against international card associations Visa and MasterCard, who have a virtual monopoly in card transactions worldwide. These two players have access to superior technology and employ stringent practices that make settlement of card transactions a breeze for banks worldwide.

This position of strength enables the two giants to demand huge fees for their services from client banks. Banks thus have to pay a high cost for associating with Visa and MasterCard. So much so that there is no alternative for banks but to accept whatever charges these two players think fit to levy for their services.
The list of service charges is quite exhaustive. Apart from transaction charges, they have a plethora of other fixed charges including annual service charges, monthly maintenance charges and quarterly charges. These are levied irrespective of whether the cardholder uses the card. The problem lies in the fact that banks cannot transfer all these charges to the customer. They have to bear the costs themselves. A senior banking official said, “These organisations are exploiting their monopoly position and technological expertise. Our current agreement requires us to unilaterally accept any future charges that may be introduced. They dictate their terms and conditions; banks don’t have any say in the matter.”

Dhimant Roy Turakhia, assistant general manager, Bank of Maharashtra said, “This is a welcome move from the RBI. If the RBI is to introduce this system, it is going to be highly economical to the bank and also to the cardholders. The charges would come down to 10%-15% of current outgo. The profitability of public sector banks will also increase and the burden will also reduce to that extent. After all, we can only pass on limited expenses to our customers.”
The most astounding fact is that Visa and MasterCard are not liable to pay a penny to the government in the form of taxes. Essentially, they are earning truckloads of revenues which are entirely tax-free. Banks are supposed to pay the service tax on behalf of Visa or MasterCard.

The RBI has already established a National Financial Switch (NFS) which handles many domestic transactions for cash withdrawal. It has been operating since the last 18 months. For the same transactions, Visa charges more than 10 times what RBI asks from banks. RBI is also looking at establishing a PoS (point of sale) switch network for routing domestic card transactions. Currently, even domestic transactions are routed through a switch located outside the country. The Visa switch lies in the US as well as Singapore. However, for this new system to work, a 24-hour fund transfer mechanism will have to be put in place. The existing National Electronic Fund Transfer (NEFT) network operates during weekdays from 9 am to 5 pm and on Saturdays from 9 am to 12 noon. The RBI is also pursuing the suggestion to extend this network to work on a 24*7 basis.

Sanket Dhanorkar [email protected]

3 years ago
7 Lakhs loan immediately
Komal Tapkire
4 years ago
Iwant 5 lakh immediate
Ritu Rajput
4 years ago
Sir I wona lone up to 6lakes
Fayyaz Mughal
4 years ago
please conact for us 03005846759
Fayyaz Mughal
4 years ago
All guy toghater amount add fund 5 corore
Pavan Patil
4 years ago
I need 3.5 lakh for clear my all pending dues....
Fast Track Loan Firm
4 years ago
Are you in any financial difficulties and you need to have capital for that your business, we will give you the financial support as we give to individual and companies if you are seriously in need of financial help and you need support you can contact us now for more details. +918582930094
Shaad Ali
5 years ago
Sir i need urgent money in 2 days and also i show my place where my business is setup i just only 1.5 lakhs needed
5 years ago
I need 200000 lakh rupees urgent lone plz help me my call 9325651041
Bijay Meher
5 years ago
Sir I need 5 lakhs ruppes loan for repay of education loan m in problem sir bank people are creating lot of problem. So can u help me out
My contact no is- 9114424927
5 years ago
Welcome to CIT GROUP INC, we appreciate the good comments that has been going round the internet about our good works and we say thankful to all that have taken a loan from our firm. Now let’s get to what we do best again. Do you need an urgent loan? A loan to probably expand or start your own business? or you need a loan for education or to pay Do you need a loan? if yes Email: [email protected]
Manjeet wadi
Replied to CASHHALL MORTGAGE comment 5 years ago
I already started business but for the support of my business I want 6lakh urgently
Bibha Baraik
5 years ago
Fake and time waste dena.... hota to sabko deta bahut pehle..........😕
Thasli Moon
5 years ago
sir i am cashier in a shop .my monthly salary 13000 . i requred a 5 lacks loan for land purchase urgently. please send the details and forms .
junior ojiehor
Replied to Thasli Moon comment 4 years ago

Hello are you in need of any type of loan if yes contact

([email protected])
surendra bhandari
5 years ago
I want home loan without salary slip
5 years ago
sir, can i get 4.00 lacs in to repay my loans? if yes how is it posible ? pl. treat it serious and urgent . thanks Pradeep
Free Helpline
Legal Credit