Visa and Mastercard were forced to complain to the US government that India’s “informal and formal” backing of the domestic payment rival RuPay had the US giants bleeding in an extremely key market.
Publicly, Visa downplayed concerns about the rise of RuPay, which had been backed by the Indian Prime Minister, who compared the use of the domestic cards akin to national service. But memos published by Reuters reveal otherwise.
Mastercard Inc has also raised such concerns privately with the US Trade Representative (USTR). Reuters reported in 2018 that the company complained and filed a protest with the USTR all the while Indian PM was using nationalism to promote the local network alternative.
In May, CEO Alfred Kelly publicly stated that for many years there was “a lot of concern” that the likes of RuPay could be “potentially problematic” for Visa, but stressed that his company is still retained the market lead in India.
“That’s going to be something we’re going to continually deal with and have dealt with for years. So there’s nothing new there,” he told during an industry event.
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“Everyone cannot go to the border to protect the country, we can use RuPay card to serve the nation,” Indian PM said in a 2018 speech which painted use of RuPay as patriotic.
When Visa expressed its concern during the USTR gathering on August 9, he referred to the comments of the Indian leader’s “speech where he basically called on India to use RuPay as a show of service to the country,” revealed an email US officials exchanged on the meeting’s readout.
Finance Minister Nirmala Sitharaman said last year that “RuPay is the only card” banks should promote. The government has also promoted a RuPay-based card for public transportation payments”.
While RuPay controls the number of cards in India, most transactions are still done through Visa and MasterCard, considering that most RuPay cards are issued by simple banks under financial inclusion programme, said an industry source.
An email from the USTR reveals that Visa had told the US government that it was concerned about India’s “push to use transit cards linked to RuPay” and “the not so subtle pressure on banks to issue” RuPay cards.
India being counted as a key growth market by both Mastercard and Visa, they have been dealt with a jolt in the form of a 2018 central bank directive for them to store payments data “only in India” for “unfettered supervisory access”.
After threatening to stop issuing new MasterCard cards indefinitely in India, the central bank said it was violating the 2018 rules. A USTR spokesman called the Mastercard ban as “draconian” in private, according to Reuters in September.