RBI allows RuPay Prepaid Forex card: Know how it works
What's the story
Indians traveling abroad will soon have another option to make payments-RuPay Prepaid Forex card. The Reserve Bank of India (RBI) has permitted Indian banks to issue RuPay Prepaid Forex cards. The decision was announced after the RBI's bi-monthly monetary policy review. Let's take a look at what the new card is and where you can use it.
Context
Why does this story matter?
RuPay has emerged as a robust payment method in a space once dominated by MasterCard and Visa. The introduction of the RuPay Prepaid Forex card will further enhance its position against its rivals. The forex card can also be seen as an effort by India to become a major player in the global finance space.
Forex card
Cardholders will be able to use RuPay Forex card overseas
The RuPay Prepaid Forex card will be issued by Indian banks in partnership with the National Payments Corporation of India (NPCI). Holders of the card will be able to use it at ATMs, point of sale (PoS) machines, and online merchants overseas. Unlike debit or credit cards, prepaid cards are 'Pay Now, Use Later' cards.
How
RBI will issue instructions about the card soon
Prepaid cards are similar to credit cards in their usage. In India, prepaid cards can be loaded up to Rs. 50,000. However, it is unclear whether the same will apply to RuPay's Forex cards. The RBI will reveal more about the card's purchase limit in the coming days. It is aimed at expanding the reach and acceptance of RuPay cards globally.
Extra charges
RuPay Prepaid Forex cards may carry a mark-up fee
Since the RuPay Prepaid Forex card will operate on a domestic payment network, fees on the card may vary compared to its international counterparts. The card may charge a small ATM withdrawal fee when transacting abroad. Unlike other forex cards, RuPay's cards may also carry a small mark-up fee. Prepaid cards typically do not carry a mark-up fee.
Other measures
RuPay cards will soon be issued in foreign jurisdictions
The RBI's moves to make RuPay cards globally accepted are not restricted to the Prepaid Forex card. Soon, RuPay Debit, Credit, and Prepaid cards will be issued in foreign jurisdictions as well. RBI and NPCI International Payment Limited (NIPL) have been working with other countries through bilateral agreements and co-branding deals to increase the outreach of RuPay cards.