VISA Complains To U.S. About India For Rupay – Free PDF Download


Card network?

  • A card issuer is the bank that issues you the card like HDFC Bank, ICICI Bank, SBI Card.
  • Card networks act as the bridge between the card issuers and the merchants.
  • The major credit card networks in India are Visa and Mastercard; these cover the major marketplace.
  • Other players are Discover, American Express and RuPay.

What has happened?

  • Visa Inc has complained to the U.S. government that India’s “informal and formal” promotion of domestic payments rival RuPay hurts the U.S. giant in a key market, memos seen by Reuters
  • In public, Visa has downplayed concerns about the rise of RuPay, which has been supported by lobbying from Prime Minister Narendra Modi that has included likening the use of local cards to national service.
  • But U.S. government memos show Visa raised concerns about a “level playing field” in India during an August 9 meeting between U.S. Trade Representative (USTR) Katherine Tai and company executives, including CEO Alfred Kelly.
  • Mastercard Inc has raised similar concerns privately with the USTR.
  • Reuters reported in 2018 that the company had lodged a protest with the USTR that Mr. Modi was using nationalism to promote the local network.
  • “Visa remains concerned about India’s informal and formal policies that appear to favour the business of National Payments Corporation of India” (NPCI), the non-profit that runs RuPay,
  • “Over other domestic and foreign electronic payments companies,” said a USTR memo prepared for Tai ahead of the meeting.

Rise of RuPay

  • PM Modi has promoted homegrown RuPay for years, posing a challenge to Visa and Mastercard in the fast-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.
  • While RuPay dominates the number of cards in India, most transactions still go through Visa and Mastercard
  • As most RuPay cards were simply issued by banks under Modi’s financial inclusion programme, industry sources say.

Use of nationalism

  • Modi, in a 2018 speech, portrayed the use of RuPay as patriotic, saying that since “everyone cannot go to the border to protect the country, we can use RuPay card to serve the nation.“
  • When Visa raised its concerns during the USTR gathering on August 9, it cited the Indian leader’s “speech where he basically called on India to use RuPay as a show of service to the country,” according to an email U.S. officials exchanged on the meeting’s readout.
  • 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 public transportation payments.

Ban on mastercard

  • Mastercard and Visa count India as a key growth market, but have been jolted by a 2018 central bank directive for them to store payments data “only in India” for “unfettered supervisory access”.
  • Mastercard faces an indefinite ban on issuing new cards in India after the central bank said it was not complying with the 2018 rules.
  • A USTR official privately called the Mastercard ban “draconian“, Reuters reported in September.

  • A plan to allow new entities to create digital payment platforms and end the National Payments Council of India’s (NPCI) dominance in online transactions has been put on hold by the regulator over data safety concerns.
  • At least six consortiums, including those led by Amazon, Google, Facebook and the Tata group, applied for the so-called new umbrella entities (NUEs) licences,
  • In partnership with companies such as Reliance Industries Ltd and ICICI Bank Ltd after the Reserve Bank of India (RBI) invited expressions of interest last year.

Q) Which of the following is correct regarding RuPay?

  1. It was launched by Finance Ministry.
  2. The RuPay card work only in India.
  1. 1 only
  2. 2 only
  3. Both 1 & 2
  4. None of the above




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