why every country should have its own payment network?

after hearing the word payment network(gateway) we have some famous names in our mind like visa and MasterCard these are the market leaders in the payment network but there are some other payment networks like Rupay, Troy, and BC card which we will discuss further.

Let’s first see what do you mean by a payment network let’s learn this word with an example suppose you want to invite your friends to your birthday party and you have the phone numbers of all the friends and the list is too long suppose 50 friends are there then there are two ways to invite them first one is to call them one by one and then invite them and the second one is to ask some of the friends if all the friends are available in a group chat or something like that, if there is one group in which all the friends are available then you’ll just simply message your invitation to the group and all of them will receive the invitation so, what’s the benefit of using the group chat firstly a lot of time got saved, and expressing invitation through typing message is very fast. we can compare this example as a group chat is a payment network that has all the details about the user’s bank to the bank to which money is gonna transferred by the user to make the whole chain simple for the banks as well as for the user the entity which provides information of the user to the bank and from the bank is called payment network(gateway).

from the above example, we can say that by using a payment network the transaction becomes fast and more efficient as well as more secure because payment networks are very secure and the reason for the security is that one entity is holding all the precious data of the user which can’t be compromised.

there are multiple payment networks like Visa, MasterCard, Rupay, and UnionPay some of them are domestic and some of them are international which we will see in the article, and what are the benefits of having a domestic payment network.

what is an international payment network?

the user can transfer money internationally as well as domestically with just one click without any inconvenience which depends on the payment network.

some more examples of only international card networks like American Express, Visa, and Master card

what is a domestic payment network?

the user can do domestic transactions in that specific country but not internationally. examples RuPay is the first-of-its-kind domestic payment network in India.

some more examples of only domestically available card networks like Union pay(China), Qi card (Iraq), Troy (Turkey), BC Card(South Korea)

what are the benefits of having a domestic payment gateway in a country?

so if there is a domestic payment gateway let’s take an example of the Rupay card which is India’s domestic payment gateway as we know with a domestic payment network our information or details of transactions will be transacted in that particular country so it will be more secure because most of the domestic payment networks are established or run or back by the government which makes it secure for the user.

the transaction time will be less because there is no need of transferring data internationally which makes it faster. transaction cost will be low comparing it with international payment networks.

here is a difference in transaction and processing charges between foreign cards and Rupay card

 So for a transaction of Rs.2000, the banks will have to pay a transaction fee of around Rs.3.25(0.042 USD) for foreign cards whereas, for RuPay, they would have to pay a fee of around Rs.2.50(0.032 USD) instead. now let’s look at the atm transaction fee is 45 paise(0.0058 USD) per transaction and 90 paise(0.012 USD) for e-commerce and point of sales transactions.

Visa or Mastercard debit card charges a variable fee which is in proportion to the concerned transaction. so the higher the value of the transaction, the higher the transaction cost when it comes to accepting credit cards or debit cards branded visa, Mastercard, Amex or discover. In the case of Rupay, as the processing takes place within the country, the processing charge for Rupay are much lower.

In conclusion:

1 thought on “why every country should have its own payment network?”

Leave a Comment

Your email address will not be published.