Vastavam web: Mastercard told the United States government in June that Prime Minister Narendra Modi was using nationalism to promote the use of a domestic payments network RuPay, 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 homegrown payments network RuPay, whose rise has broken the dominance of U.S. payment giants such as Mastercard and Visa. More than half of India’s 1 billion debit and credit cards now go through the RuPay payment system, and that means companies such as Mastercard face an uphill task to expand rapidly in one of the world’s biggest payments growth markets.
In a written reference to Modi’s stance, Mastercard told the Office of the United States Trade Representative (USTR) on June 21 that the prime minister “associated the use of RuPay cards with nationalism, claiming it serves as ‘kind of national service’.” U.S. companies in India have been increasingly battling Modi’s policies they perceive to be protectionist. This year, U.S. 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.
“The Indian government’s preferential treatment of RuPay coupled with fallacies on pricing must be discontinued,” the company asked the U.S. 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. There was no response to requests for comment from Modi’s office.
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 percent of the global Mastercard workforce, the largest outside the United States. The company recruited a Bollywood actor this year for a campaign aimed at encouraging consumers in smaller cities to use debit cards more regularly as it seeks to grow in India.