Modi used nationalism to promote RuPay: MasterCard

New Delhi’s protectionist policies hurting foreign payment companies, the financial services company told the US government in June

Mastercard told the US in June that Prime Minister Narendra Modi was using nationalism to promote the use of a domestic payments network, and New Delhi's protectionist policies were hurting foreign payment companies, a document seen by Reuters showed.

Mastercard told the US in June that Prime Minister Narendra Modi was using nationalism to promote the use of a domestic payments network, and New Delhi's protectionist policies were hurting foreign payment companies, a document seen by Reuters showed.

Modi has in recent years backed India's home-grown payments network "RuPay", 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 go through RuPay.

Modi has publicly endorsed the indigenous card payment network, saying using RuPay was like serving the country as its transaction fee stays within India and could help build roads, schools and hospitals.

In a written reference to Modi's stance, Mastercard told the Office of the United States Trade Representative (USTR) on June 21 that Modi "associated the use of RuPay cards with nationalism, claiming it serves as 'kind of national service'".

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

US companies in India have been increasingly battling Modi's policies they perceive to be protectionist. This year, US technology companies have protested against an Indian law that would require them to store more data locally, raising their costs. The previously unreported note, which was seen by Reuters, shows the extent to which Modi's support for RuPay frustrated the Purchase, New York-based company, which is the world's second-largest payments processor.

"Increasing rhetoric from the prime minister and government mandates on promotion and preference for RuPay ... continues to create market access issues for US payments technology companies," Mastercard said in the note. "The Indian government's preferential treatment of RuPay coupled with fallacies on pricing must be discontinued," the company asked the US government to propose.

In response to Reuters queries, Mastercard said in a statement it "fully supports" the Indian government's initiatives and is "deeply invested" in the country. The company did not comment on its USTR note and its executive Sahra English did not respond to questions.

The USTR did not respond to a request for comment and it was not clear whether the US agency raised Mastercard's concerns with New Delhi. Neither Visa, nor Modi’s office responded to Reuters queries.

Mastercard, whose president and chief executive is India-born Ajay Banga, has a planned investment outlay of $1 billion in its key Indian market for 2014-2019. With 2,000 people, India accounts for 14 per cent of the global Mastercard workforce, the largest outside the US.

The Indian card network was developed by the National Payments Corporation of India (NPCI), a group largely owned by state banks but which also counts private and foreign banks among its shareholders. It also oversees the payments services in India.

The chief executive of the NPCI, Dilip Asbe, did not respond to a request for comment.