Union fi­nance min­is­ter Arun Jait­ley says Master­card, Visa los­ing out to UPI, Ru­pay in In­dia

The Northlines - - BUSINESS -

Union fi­nance min­is­ter said on Thurs­day that Master­card and Visa were los­ing mar­ket share to do­mes­tic pay­ments net­works, months af­ter Master­card com­plained to the US gov­ern­ment that Prime Min­is­ter Naren­dra Modi was us­ing na­tion­al­ism to pro­mote a lo­cal ri­val.

Fi­nance min­is­ter Arun Jait­ley spoke about the surg­ing growth of Ru­pay and Uni­fied Pay­ment In­ter­face (UPI), which al­lows swift in­ter-bank fund trans­fers, on the sec­ond an­niver­sary of Modi’s shock de­ci­sion to re­place high-value bank notes in a bid to flush out un­taxed wealth.

Modi has said when In­di­ans use Ru­pay they were serv­ing the coun­try as its trans­ac­tion fees stay within In­dia and could help build roads, schools and hospi­tals, an en­dorse­ment that has wor­ried Pur­chase, New York-based Master­card, which is the world’s sec­ond-largest pay­ments pro­ces­sor.

“To­day Visa and Master­card are los­ing mar­ket share in In­dia to in­dige­nously de­vel­oped pay­ment sys­tem of UPI and RU­PAY Card, whose share have reached 65 per­cent of the pay­ments done through debit and credit cards,” Jait­ley said in a Face­book post about the var­i­ous re­sults of the note scrap­ping ex­er­cise, known as de­mon­eti­sa­tion. Visa de­clined to com­ment. Master­card did not re­spond to an email seek­ing com­ment.

Ru­pay process pay­ments be­tween banks and mer­chants for pur­chases made with credit or debit cards, while UPI in­stantly trans­fers funds be­tween two bank ac­counts linked to mo­bile phones.

So­cial me­dia back­lash Jait­ley was re­fer­ring to the vol­ume of trans­ac­tions, not the value.

Though Ru­pay, owned by many In­dian and for­eign banks, ac­counts for more than half of In­dia’s 1 bil­lion debit and credit cards, in­dus­try sources say Visa and Master­card still process the vast ma­jor­ity of the value of pay­ments trans­ac­tions in the coun­try. In­dian pay­ments trans­ac­tions were worth $51 bil­lion in Au­gust, ac­cord­ing to cen­tral bank data.

Jait­ley said Ru­pay’s to­tal trans­ac­tions had leapt to 84.3 bil­lion ru­pees ($1.16 bil­lion) as of Septem­ber, from 11 bil­lion ru­pees be­fore de­mon­eti­sa­tion. To­tal trans­ac­tions done us­ing UPI had jumped to 598 bil­lion ru­pees ($8.26 bil­lion) from 500 mil­lion ru­pees in Oc­to­ber 2016, around the time it was launched.

Reuters re­ported last week that Master­card com­plained to the Of­fice of the United States Trade Rep­re­sen­ta­tive on June 21 that Modi “as­so­ci­ated the use of Ru­pay cards with na­tion­al­ism, claim­ing it serves as ‘kind of na­tional ser­vice’.”

The Master­card note said that while Modi’s dig­i­tal pay­ments push was “com­mend­able”, the

In­dian gov­ern­ment had adopted “a se­ries of pro­tec­tion­ist mea­sures” to the detri­ment of global com­pa­nies.

The story sparked a back­lash on so­cial me­dia against Master­card in In­dia, one of the world’s big­gest pay­ments growth mar­kets.

Sev­eral peo­ple said on Twit­ter they had asked their banks to re­place their Master­card with Ru­pay, with some us­ing the hash­tag #Boy­cottmas­ter­card to voice their con­cerns.

One user posted a pic­ture of a Master­card cut into pieces, while an­other named Ramesh up­loaded a graphic with a Master­card logo on a toi­let flush. A spokesman for the Delhi arm of Modi’s rul­ing party, the Bharatiya Janata Party, said he had asked his bank to can­cel his Master­card and switch to Ru­pay.

Master­card did not re­spond to Reuters’ emailed re­quest for com­ment on the so­cial me­dia back­lash.

Ash­wani Ma­ha­jan, who heads an eco­nomic group, Swadeshi Ja­gran Manch, which is linked to the ide­o­log­i­cal par­ent of Modi’s party, said on Thurs­day that com­pa­nies such as Master­card should be “com­pet­ing with Ru­pay, not com­plain­ing to the U.S. gov­ern­ment”.

“They have en­joyed their mar­ket share for so long, we have the right to pro­tect and pro­mote our eco­nomic in­ter­ests,” Ma­ha­jan told Reuters.

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