Visa complains to US govt against RuPay promotion

Visa Inc has complained to the US government that India's "informal and formal" promotion of domestic payments rival RuPay hurts the US giant in a key market, memos seen by Reuters show.

In public Visa has downplayed concerns about the rise of RuPay, which has been supported by public lobbying from Prime Minister Narendra Modi that has included likening the use of local cards to national service.

But US government memos show Visa raised concerns about a "level playing field" in India during an August 9 meeting between US trade representative (USTR) Katherine Tai and company executives, including CEO Alfred Kelly.

Mastercard Inc has raised similar concerns privately with the USTR. Reuters reported in 2018 that the company had lodged a protest with the USTR that Modi was using nationalism to promote the local network.

"Visa remains concerned about India's informal and formal policies that appear to favour the business of National Payments Corporation of India" (NPCI), the nonprofit that runs RuPay, "over other domestic and foreign electronic payments companies," said a USTR memo prepared for Tai ahead of the meeting.

Visa, USTR, Modi's office and the NPCI did not respond to requests for comment.

Modi has promoted homegrown RuPay for years, posing a challenge to Visa and Mastercard in the fast-growing payments market. RuPay accounted for 63 per cent of India's 952 million debit and credit cards as of November 2020, according to the regulatory data, up from 15 per cent in 2017.

Publicly, Kelly said in

May that for years there was "a lot of concern" that the likes of RuPay could be "potentially problematic" for Visa, but he stressed that his company remained India's market leader. "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 said in an event.

Modi, in a 2018 speech, portrayed the use of RuPay as patriotic, saying that since "everyone cannot go to the border to protect the country, we can use RuPay card to serve the nation."

When Visa raised its concerns during the USTR gathering on August 9, it cited Modi’s "speech where he basically called on India to use RuPay as a show of service to the country," according to an email US officials exchanged on the meeting's readout.

While RuPay dominates in numbers, most transactions still go through Visa and Mastercard as most RuPay cards were issued by banks under the financial inclusion programme.