India Times reports that Mastercard filed a complaint in June that the Indian Prime Minister, Narenda Modi, was:
- using nationalism to promote the use of a domestic payments network, and New Delhi’s protectionist policies were hurting foreign payment companies,.
We talk about the trend for indigenous payment networks in this Mercator Advisory Report. Brazil has ELO, Russia has Mir, India has RuPay, and China has Union Pay. The models compete with Mastercard and Visa but are designed for domestic use. There are some variations, such as Discover’s bilateral acceptance agreement with Union Pay, but generally speaking the concept is to offer a low-budget alternative.
- Modi has in recent years backed India’s homegrown payments network “RuPay”, whose rise has broken the dominance of U.S. payment giants such as Mastercard and Visa. More than half of India’s 1 billion debit and credit cards now go through the RuPay payment system, and that means companies such as Mastercard face an uphill task to expand rapidly in one of the world’s biggest payments growth markets.
- In a written reference to Modi’s stance, Mastercard told the Office of the United States Trade Representative (USTR) on June 21 that the prime minister “associated the use of RuPay cards with nationalism, claiming it serves as ‘kind of national service’.”
The note, which was sent by a Mastercard Vice President for Global Public Policy, Sahra English, said that, while Modi’s digital payments push was “commendable”, the Indian government had adopted “a series of protectionist measures”
Networks previously challenged the World Trade Organization about China’s lack of cooperation in the payments market, so it will be interesting to see how India reacts.
Payments are one of a few topics that unify the world. It certainly is not a place to “build a wall.”
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group