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Mastercard complaints against Modi’s favour of RuPay and protectionist policies


In the latest onslaught of criticism against the government for promoting and protecting Indian products and services, Mastercard has complained to the US government regarding PM Narendra Modi’s favour of RuPay’s payment network.

The global payments firm communicated its concerns to the Office of United States Trade Representatives (USTR) saying that Modi was using nationalist agenda for urging the population to use RuPay and play their part in servicing the country, reports Reuters.

In June this year, Modi said that instead of going to the borders to protect the country one can also serve the nation by using RuPay cards as the fee paid over the transactions that take place over this service will stay within the country and can be used to enable growth and development.

Mastercard responded to this claiming that only 15-20 per cent of the debit transaction fee went out of the country, rest stayed within.

Further, while Mastercard appreciated Modi’s push for digital payments, the global payments firm are upset about the fact that their potential benefit from this growth is being curbed by the government with their promotion of domestic products.

The continuous promotion os the use of RuPay by the Indian government through various direct and indirect tactics has created market and consumer access problems for the global payments firms, and hence should be stopped, feels Mastercard.

One of the indirect moves that Modi government used to increase the usage of RuPay was through starting a financial inclusion campaign and making banks issue only RuPay cards to new customers.

Mastercard has also lashed out on this saying that NPCI, the institution formed largely of Indian banks and overseer of payment, remains the only beneficiary in the campaign.

The company argued with Modi’s promise of RuPay having a lower pricing than Mastercard by saying that this was a false promise.

However, due to RuPay’s increasing use due to its lower transaction rate, both Visa and Mastercard also had to lower their respective transaction rates to stay in the competition.

As far as promotion of RuPay is concerned, the government also proposed a 20 per cent cashback on GST if a transaction was made through BHIM or RuPay to fuel their usage.

As a result of these various moves, RuPay’s rise did break the dominance of Visa and Mastercard in the country and by the looks of it, continues to do so. In a sense, the insecure lashing out by these global companies is not unfounded.

In this global tussle against with Indian protectionism, this isn’t the first time Visa or Mastercard has raised issues against Indian government’s functionality. Recently, the firms also raised their voices against RBI inviting iSPIRT to a meeting between India’s highest bank and the top US financial companies regarding data localisation.

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