At present, all card-based transactions are settled through the global payment network of Visa and MasterCard. The plan, taken up under the aegis of the Indian Banks' Association (IBA), comes amid estimates that payments through cards would increase three-fold over the next five years.

Every Indian eftpos transaction currently involves payment of an interchange charge to MasterCard or Visa for settlement, which amounted to about $50 million during 2005-2006. A domestic card payment settlement company would save the outlay on commission paid to Visa and MasterCard, a senior banker told the Standard.

Depending on the cost advantage and nature of transactions, different infrastructure could be used, said bankers. For international transactions, the 'India Pay' switch could connect to MasterCard or Visa. The gateway could also interact with another payment system like China Union Pay.  

Read Article at Business Standards.