Evaluating India's New Card Network's Impact on MasterCard
by April 7, 2011 2:58 pm0
India has finalized the commercial launch of Rupay, the proposed India domestic card network. We all know that it will be competing with existing international card networks such a Visa and MasterCard for market share. But what exactly would the impact be? A blog posted by Trefis on Forbes.com provides interesting quantitative analyses on the emerging Rupay’s impact on MasterCard’s growth over the next several years:
In our analysis of MasterCard, we estimate that the number of transactions processed by MasterCard will grow from 22.6 billion in 2010 to about 56.8 billion by the end of our forecast period at a compound annual growth rate of 14%. Much of this growth will come from the Asia-Pacific region as consumers in this region are only beginning to embrace widespread use of electronic payment methods.
If India card Rupay gained popularity and other countries in the Asia-Pacific region decide to follow suit, MasterCard’s number of transactions could only grow at a rate of lower rate than we forecast. In a scenario where the number of transactions processed by MasterCard would reach only 50 billion by the end our forecast period and grow at a slower rate of around 12% annually, this would cut our price estimate for MasterCard by about 5%.
In recent years, major global card networks have been facing more and more challengers –such as China UnionPay in China, JCB in Japan, BC card in South Korea, as well as PayFair, EAPS, and Monnet in Europe –in addition to Rupay. On one hand, they will challenge incumbent global players’ dominance of the global market. At the same time, their emergence might also be a blessing to existing players as they will work hard to push for better adoption among their consumers and merchants, thus hopefully increasing the total size of the pie.
See previous PaymentsJournal coverage of RuPay here: http://www.paymentsjournal.com/Featu…y_Named_Rupay/
Read more about the TREFIS analysis here: http://blogs.forbes.com/greatspecula…stercard-visa/