MasterCard mourns Modi's nationalism, while India, RuPay, takes the lead

In June, Mastercard told the US government that Indian Prime Minister Narendra Modi was using nationalism to promote the use of a national payment network and that New Delhi's protectionist policies were hurting to foreign payment companies, according to a document seen by Reuters. . In recent years, Modi has supported the Indian payment network "RuPay", whose rise in power has shattered the dominance of US payment giants such as Mastercard and Visa.

More than half of the one billion Indian credit cards and credit cards are now subject to the payment RuPay system, which means that companies such as Mastercard have to face a difficult task to develop quickly on the one of the largest growth markets for payments. Modi publicly endorsed the aboriginal card payment network, saying that using RuPay was like serving the country, as its transaction fees remained in India and could help build roads, schools and schools. 39; hospitals.

In a written reference to Modi's position, Mastercard told the Bureau The US Trade Representative (USTR) said on June 21 that the prime minister "badociated the use of RuPay cards with nationalism, claiming that it was "a type of national service" ". The note, sent by a vice-president of Mastercard Sahra English, Global Public Policy, said that although Modi's advanced digital payments are "commendable," the Indian government had adopted "a series of protectionist measures At the expense of global companies. American companies in India are increasingly fighting Modi's policy, which they perceive as protectionist. This year, US tech companies have protested against an Indian law that would require them to store more data locally, increasing their costs.

The previously unpublished note, seen by Reuters, shows how frustrating Modi's support for RuPay was. Purchase Corporation, based in New York, which is the world's second largest payments processor. "The growing rhetoric of Prime Minister and government mandates over promotion and preference for RuPay … continues to create market access issues for US payment technology companies," Mastercard said in the note.

on pricing must be interrupted, "the company asked the US government. In response to questions from Reuters, Mastercard said in a statement "fully support" the Indian government's initiatives and be "deeply invested" in the country.

The company did not comment on its USTR rating and its director, Sahra English, did not respond. to the questions. The USTR did not respond to a request for comment and it was unclear whether the US agency expressed Mastercard's concerns to New Delhi. Visa did not answer Reuters' questions. There was no response to requests for comments from Modi's office. Master, whose president and CEO is Ajay Banga, originally from India, plans to invest $ 1 billion on his main Indian market for the period 2014-2019.

With 2,000 people, India represents 14% of the world's largest Mastercard, the largest outside the United States. The company hired a Bollywood player this year for a campaign to encourage small-city consumers to use debit cards more regularly as it grows in India.

DIGITAL BOOST

In November 2016, Modi began promoting the use of digital payments after replacing high-value banknotes in order to fight the economy underground. This has increased the use of cards: In August, Indian people recorded $ 51 billion worth of credit and debit card transactions, almost double the amount recorded in November 2016, according to data from the central bank. , which do not provide separate usage statistics comparing Indian and foreign payment networks.

Foreign card companies also faced increasing use of mobile wallets and state-supported digital money transfer services, some of which were promoting Modi. Modi's financial inclusion program, launched in 2014, has boosted RuPay. Thus, all first-time Indian bankers were offered a RuPay card, not a MasterCard or Visa.

was developed by the National Indian Payments Corporation (NPCI), a group largely owned by state-owned banks but also owned by private and foreign banks. He also oversees payment services in India. In its note to the USTR, Mastercard stated that the government had instructed the banks to support the NPCI directly and indirectly, making it the "sole beneficiary" of Modi's financial inclusion program.

The NPCI acted both as a "quasi-regulator and competitor payment network," Mastercard said, adding that this was "compounded by the government's open preference for RuPay with misleading statements and inaccurate price information. , although Mastercard has a lower price than RuPay ". Pricing refers to fees paid by banks to payment processors such as Mastercard for card transactions.

The company did not detail the specific statements to which it referred. Dilip Asbe, director general of the NPCI, did not respond to a request for comment. At one point, RuPay received a transaction fee equal to half that charged by Mastercard and Visa, said an industry source, but US card companies have cut fees in recent months.

In June, Modi told foreign card companies to impose their transaction fees abroad. Since not everyone can go to the border to protect the country, we can use the RuPay card to serve the country. A month later, Mastercard issued a press release stating that the company only received 15-20% of debit card transaction fees, with the balance remaining "in the Indian economy".