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Visa complains to US government about India’s support for local rival RuPay

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Visa Inc has complained to the US government that India’s “formal and informal” promotion of domestic payments rival RuPay is hurting the US giant in a key market, according to memos viewed by Reuters.

In public, Visa played down concerns about the rise of RuPay, which was supported by public lobbying from Prime Minister Narendra Modi, who notably compared the use of local cards to national service.

But U.S. government memos show Visa raised concerns about a “level playing field” in India at an August 9 meeting between U.S. Trade Representative (USTR) Katherine Tai and executives. of the company, including CEO Alfred Kelly.

Mastercard Inc has raised similar concerns privately with the USTR. Reuters reported in 2018 that the company 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 which appear to favor the activities of the National Payments Corporation of India” (NPCI), the non-profit organization that operates RuPay, “over other payment companies. domestic and foreign electronics, ”a USTR memo said. prepared for Tai before the meeting.

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

Modi has been promoting local RuPay for years, challenging Visa and Mastercard in the rapidly growing payments market. RuPay accounted for 63% of India’s 952 million debit and credit cards as of November 2020, according to the most recent regulatory data on the company, up from just 15% in 2017.

Publicly, Kelly said in May that for years there had been “a lot of concern” that RuPay was “potentially problematic” for Visa, but he stressed that his company remained the leader in the Indian market.

“This will be something that we are going to deal with on an ongoing basis and that we have been dealing with for years. So there is nothing new about this,” he said at an industry event.

“A NOT SO SUBTLE PRESSURE”

Modi, in a 2018 speech, described the use of RuPay as patriotic, saying that “not everyone can go to the border to protect the country, we can use the RuPay card to serve the nation.”

When Visa voiced its concerns at the USTR meeting on August 9, it cited the Indian leader’s “speech in which he essentially called on India to use RuPay as a show of service to the country.” , according to an email exchanged by U.S. officials following the meeting. .

Finance Minister Nirmala Sitharaman said last year that “RuPay is the only card” banks should promote. The government has also promoted a RuPay-based card for payments on public transport.

While RuPay dominates the number of cards in India, most transactions still go through Visa and Mastercard, as most RuPay cards have simply been issued by banks as part of Modi’s financial inclusion program, sources say. of the sector.

Visa told the US government it was concerned about “India’s push to use RuPay-linked transit cards” and “the not-so-subtle pressure on banks to issue” RuPay cards, according to the USTR email.

Mastercard and Visa count India as a key growth market, but were rocked by a 2018 central bank directive asking them to store payment data “only in India” for “unhindered supervisory access.”

Mastercard faces an indefinite ban on issuing new cards in India after the central bank said it broke the 2018 rules. A USTR official privately referred to Mastercard’s ban as ” draconian, “Reuters reported in September.

This story was posted from an agency feed with no text editing. Only the title has been changed.

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