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US payment card firms losing out to locals in India Pixabay Featured

India's domestic payments networks are gaining ground over US companies Mastercard and Visa, a few months after the two American firms complained to their government that the Indian Prime Minister Narendra Modi was pushing a local rival.

Reuters reported that Indian Finance Minister Arun Jaitley had said in a Facebook post that domestic payments firms RuPay and Unified Payment Interface — the latter allows fast transfers between banks — were growing rapidly two years after Modi, in a shock decision, removed high-denomination currency notes from circulation.

Modi had said earlier this year that when Indians used RuPay they were aiding their country as transaction fees would remain at home.

Jaitley said in his post, made in both English and Hindi,: "Visa and Mastercard are losing market share in India to indigenously developed payment system of UPI and RuPay card whose share have reached 65% of the payments done through debit and credit cards."

He said UPI, launched in 2016, had seen transactions grow from Rs 500 million (A$9.5 million) in October 2016 to Rs 598 billion in September 2018.

The Bharat Interface for Money, an app developed for quick payment transactions using UPI, is used by 12.5 million Indians. BHIM transactions have increased from Rs 200 million in September 2016 to Rs 70.6 billion two years later. The share of BHIM transactions in overall UPI transactions is at about 48% in June, 2017.

The RuPay card is used both at point of sale and for ecommerce and its transactions have increased from Rs 8 billion before demonetisation to Rs 57.3 billion in September 2018 for PoS and from Rs 3 billion to Rs 27 billion in ecommerce.

Mastercard, Visa and American Express have also been lobbying the Indian Government to allow them to store the data of Indian customers outside the country.

The news that Mastercard and Visa had complained to their government about Modi's comments on RuPay led to a massive backlash on social media, with users employing the hashtag #BoycottMastercard to protest.

Reuters quoted Ashwani Mahajan, who heads a group linked to Modi's Bharatiya Janata Party, as saying Mastercard and Visa should compete with RuPay, not complain.

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

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the sitecame into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

 

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