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 foreign payment companies according to a document consulted by Reuters. Over the last few years, Modi has been supporting India's "RuPay" payment network, whose rise has broken the dominance of US payment giants such as Mastercard and Visa.
More than half of India's 1 billion debit and credit cards now pass through the RuPay payment system, which means that companies like Mastercard have to face a difficult task to quickly grow on one of the most large 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 build roads, schools and hospitals.
In a written reference to Modi's position, Mastercard told the US Trade Representative's Office on June 21 that the Prime Minister "associated the use of RuPay cards with nationalism, claiming that it served of "type of national service" ". The note, which was sent by Sahra English, vice president of Mastercard for global public policies, says that although Modi's digital payment campaign is "commendable", the Indian government has 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, 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The previously unpublished note, which was seen by Reuters, shows how much Modi's support for RuPay has frustrated the New York-based Purchase Corporation, which is the world's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 processor. "The growing rhetoric of Prime Minister and government mandates on promotion and preference for RuPay … continues to create market access issues for US payment technology companies," Mastercard said in a statement. Note.
"The preferential treatment granted to RuPay by the Indian government, associated with pricing errors, 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 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. Mastercard, whose President and CEO is Ajay Banga, originally from India, plans to invest $ 1 billion on its 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 hired a Bollywood actor this year for a campaign to encourage consumers in small towns to use debit cards more regularly while it seeks to expand in India.
In November 2016, Modi began promoting the use of digital payments after replacing high-value banknotes to combat the underground economy. 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 had to deal with the increasing use of mobile portfolios and state-backed digital money transfer services, some of which were promoting Modi. RuPay benefited from a big boost thanks to Modi's so-called financial inclusion program launched in 2014, which means that all Indians opening a bank account for the first time were offered a RuPay card, and 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 said the government had instructed the banks to provide direct and indirect support to the NPCI, 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 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 specify which specific statements it referred to. Dilip Asbe, CEO of 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.
Prices and fees are not publicly available. 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". He did not name RuPay.