INSUBCONTINENT EXCLUSIVE:
have grumbled to Washington about the lack of a level playing field as New Delhi has cajoled banks to shift to a homegrown alternative
For their alleged failure to comply with local data-storage rules, Mastercard, Discover Financial Services and American Express Co
have run into regulatory trouble in the second-most-populous nation
Recurring payments from the country have been a disaster for failing too often.
It may be time for a thaw in the relationship
According to news portal The Morning Context, the Reserve Bank of India is keen to grant Visa and Mastercard access to the country's popular
This is when the country of 1.4 billion people has only 7.3 million point-of-sales terminals that swipe cards.
Many emerging markets have
warmed up to smartphones ahead of plastic and expensive card readers
them their phone screens after successful payments
Of this, about Rs 10 trillion was for individuals swapping money with one another
On the remaining Rs 3 trillion of QR-code spending at merchants, the government remunerates banks so that they promote online transactions
and make formal credit available to disadvantaged groups such as street vendors.
Opening up this large and fast-growing market to the major
networks will mean that credit limits will be used, without the physical cards being swiped
This could potentially be a big deal as at least some users will want to borrow for purchases, instead of using their own funds
Industry participants, however, envisage a pushback
The National Payments Corporation of India, the operator of the UPI protocol, is also the sponsor of RuPay, the local card trying to get a
foothold against American networks
The RBI recently allowed RuPay credit cards to be linked to UPI
Why would NPCI want to surrender this nascent advantage so soon? The short answer: This is what banks want.
RuPay has issued more than 600
million cards, but most of them are debit instruments
Today, New Delhi and Washington have a common interest in countering Beijing
Tomorrow, the alignment might shift
If the US tries to use payment as a foreign-policy lever, taking a leaf from sanctions against Russia, then India must be able to soften the
protected financial landscape
A more collaborative approach may be needed to make the rupee an internationally acceptable medium of exchange
And then the lender has to go and earn a spread
However, if some purchases move to credit cards, the bank providing the loan immediately acquires a lucrative asset and starts praying that
So that when the state subsidies to popularize online payments end, all debit transactions can still remain free.
This gives banks a strong
able to tap it as freely as RuPay
If the incumbent protests too much, it may not be a bad idea to revive a now-suspended plan to license more operators
When the pie grows, everyone benefits
As for using credit cards for geopolitics, the stick can wait if a juicy carrot does the job just as well.
