Mastercard protested the promotion of the RuPay network of Indian cards by Narendra Modi

NEW DELHI: Mastercard told the US government in June that Indian Prime Minister Narendra Modi was using nationalism to promote the use of a domestic payment network, and that protectionist policies in New Delhi were hurting to foreign payment companies, according to a document seen by Reuters.

In recent years, Modi has supported the local payment network "RuPay", whose rise has shattered the dominance of the US giants of payments, such as Mastercard and Visa. More than half of the 1 billion debit and credit cards in India now go through the RuPay payment system, which means that companies such as Mastercard have to face a difficult task to develop quickly on the Internet. one of the largest markets in payment growth.

Modi publicly endorsed the aboriginal card payment network, claiming that the use of RuPay was as if it was serving the country, its remaining transaction fees in India and being able to help with the construction of roads, 39, schools and hospitals.

In a written reference to Modi's position, Mastercard told the US Trade Representative's Office (USTR) on June 21 that the prime minister "badociated the use of RuPay cards with nationalism," baderting that she was serving as a "national service type" & # 39 ;.

The note, which was sent by Sahra English, Vice President of Mastercard for Global Public Policy, said that while Modi's push for digital payments is "commendable", the Indian government has adopted "a series of protectionist measures "to the detriment of global enterprises.

US. Indian companies are increasingly fighting against Modi's policy, which they perceive as protectionist. This year, American tech companies protested against an Indian law that would require them to store more data locally, which would increase their costs.

The previously unpublished note, which was seen by Reuters, shows how much Modi's support for RuPay has frustrated the New York-based Purchase Corporation, which is the world's second-largest payment processing center.

"The Increasing Rhetoric of Prime Minister and Government Mandates in Promotion and Preference for RuPay … Continues to Create Market Access Problems for US Payment Technology Companies" ", said Mastercard in the note.

"The preferential treatment of the Indian government with regard to RuPay, badociated with errors in pricing, must be abandoned", asked the US government to make a proposal.

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 senior management, Sahra English, did not answer questions.

The USTR did not respond to a request for comment and it was unclear whether the US agency had raised Mastercard's concerns with New Delhi. Visa did not answer Reuters' questions.

There was no response to requests for comments from the Modi office.

Mastercard, 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 Mastercard's global workforce, the largest outside the United States.

The company recruited a Bollywood actor this year for a campaign to encourage consumers in small towns to use debit cards more regularly to expand in India.

DIGITAL BOOST

In November 2016, Modi began promoting the use of digital payments after replacing high-value banknotes in order to combat the underground economy.

This increase in the use of cards: Indians recorded transactions worth $ 51 billion in debit and credit cards in August, nearly double the amount recorded in August. November 2016, according to central bank data, which do not provide separate usage statistics comparing Indian and foreign uses. payment networks.

Foreign card companies also faced increasing use of mobile wallets and state-backed digital money transfer services, some of which were promoting Modi.

RuPay enjoys significant support due to Modi's so-called financial inclusion program launched in 2014, which means that all Indians opening a bank account for the first time are offered a RuPay card, not a MasterCard or Visa.

The Indian card network was developed by the National Payments Corporation of India (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 a competing payment network," said Mastercard, adding that this was "compounded by the government's open preference for RuPay with misleading statements and inaccurate information about prices, even if Mastercard had 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 specify which specific statements it referred to.

NPCI CEO Dilip Asbe 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. Prices and fees are not publicly available.

In June, Modi said that foreign card issuers were imposing their transaction fees abroad and that "not everyone can go to the border to protect the country, we can use the RuPay map to serve the country ".

A month later, Mastercard issued a press release stating that the company only earns 15-20% of debit card transaction fees, the rest remaining "in the Indian economy". He did not name RuPay.