NEW DELHI: India’s 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 Indian 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 shares have reached 65% 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 one billion debit and credit cards, industry officials 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.