Context
Recently, Maldives is set to introduce India’s RuPay service.
About RuPay
- RuPay is the first global card payment network in India.
- It is a combination of “Rupee” and “Payment,”
- It was launched by the National Payments Corporation of India (NPCI) in 2012.
- Objective: Create a domestic, open, and multilateral payment system, fulfilling the Reserve Bank of India’s (RBI) vision.
- It is widely accepted at ATMs, POS devices, and e-commerce websites throughout India.
- RuPay enables electronic payments across all Indian banks and financial institutions.
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Reasons behind the Maldives’ decision to adopt RuPay
- Strengthening Maldivian Rufiyaa (MVR): The Maldivian government aims to make their currency, the Rufiyaa, stronger by using less US dollars in transactions with Indian tourists.
List of countries that accept Rupay
- Bhutan
- Nepal
- Mauritius
- Singapore
- UAE
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- This might make their economy more stable and could improve exchange rates.
- Boost Bilateral Trade of Maldives: Facilitating rupee transactions could streamline payments between India and the Maldives, potentially encouraging more trade between the two countries.
- Promote Tourism and economic linkages: Easier rupee transactions could incentivize Indian tourists to spend more freely in the Maldives, benefiting the Maldivian tourism industry, a major source of income for the country.
Impact of launching India’s Rupay service on Indian economy
Positives
- Income from Transaction Fees: Indian banks that give out RuPay cards might earn money from fees when people use those cards in the Maldives, which helps banks make more money.
- Growing RuPay Network: More countries accepting RuPay means it’s becoming a bigger deal globally.
- This could mean more people and shops start using it in India too, which might make transactions cheaper.
- Opportunity for Indian Businesses: With Indian tourists using RuPay in the Maldives, more people there might start using Indian websites or services that accept RuPay. This could create new markets for Indian businesses.
Negatives
- Data Security Concerns: Inadequate protection of RuPay transactions in the Maldives could lead to data breaches or fraud affecting Indian cardholders. Therefore, there is a need for strong security.
- Uncertain Regulatory Environment: Unclear or changing regulations in the Maldives could disrupt RuPay operations which could be an inconvenience for Indian tourists and businesses.
- Dependence on Maldives Implementation: The success of RuPay in the Maldives depends on Its effective implementation by Maldives
- Any delays or issues in the rollout could limit the benefits.
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May 24, 2024
