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Cooperative banks prefer Rupay to Mastercard, Visa

Cooperative banks said that affordability to enable non-cash transactions and human resource bottlenecks are the main reasons why digital payments have not peaked up in rural areas and towns

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Cooperative banks in Gujarat prefer Government of India promoted Rupay Card to Mastercard or Visa, revealed a sample survey during a workshop for digital payments in the city on Saturday. Cooperative banks said that affordability to enable non-cash transactions and human resource bottlenecks are the main reasons why digital payments have not peaked up in rural areas and towns.

"It was very surprising that bankers chose Rupay over Mastercard and Visa, considering the quality of services Mastercard offers. Perhaps there is a perception that their services are costlier, which is not the case. There might be a feeling that Rupay is an Indian product and so it should be promoted," said Deepti Mittimani, director, business solution of Wibmo, which manages back-end of the digital payments of public and private banks. Wibmo and Gujarat Urban Cooperative Banks Federation had organised a workshop, in which 46 officials of 24 banks participated in the sample survey.

Experts in technology say that digital transactions are mostly limited to PSBs and private banks and therefore predominantly covering top 10 cities. However, beyond that there are users who need digital payments but are not provided.

"The penetration of Point of Sales (PoS) machines is predominant in top 10 cities only. PoS density in smaller towns and city is so less that its servicing is unviable. However, the recent offerings like Bharat QR, which is code on the sticker and one can make payments by scanning the code using a smartphone, can increase digital payments in such places," said Sanjoy Bose, EVP Sales and Marketing of Wibmo.

Lack of options for digital payments by cooperative banks has alienated youths, which is the fastest emerging clientele for banks. "These segment gets diverted to HDFC Bank or other private and PSBs. With these offerings, we plan to woo this segment," said JV Shah, CEO of Gujarat Urban Cooperative Banks Federation.

The federation will showcase vendors in different segments, which individual banks will choose according to their needs. There are 18 District Central Cooperative Bank (DCCB) and 220 urban cooperative banks in Gujarat. However, many of them are one branch or having two or three branches. Deploying a digital payment solution is not affordable for them.

Other concerns of the bankers include security of digital transactions and lack of awareness about partners to execute the facilities. Market players say that the trend of digital transactions in India started from 2009 onwards, when about three lakh digital transactions were reported in a year. Now the number has risen to 220 crore. These do not include mobile payments. 

Players say that discount and cashback offers go a long way in encouraging users to pay digitally. Even after the campaign ends, digital payments rise by about 50%, they say.

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