Mastercard has told the US government that Prime Minister Narendra Modi is using nationalism to promote India’s own payment network, RuPay. It has complained to its government that this strategy is causing losses. Global companies in the payments sector are understandably upset by the Modi government’s support for RuPay, but to the point where they have to complain about the Indian Prime Minister is truly astonishing. What is the reason behind this?
With the announcement of demonetization on November 8, 2016, the Modi government took a step towards a “cashless India.” Per capita income in India is also growing rapidly, banks are now reaching small towns, and digital transactions are accelerating due to demonetization. This is why major companies in the payments sector, including Mastercard, are beginning to view India as a major market with immense potential for expansion.
Recent data from the Reserve Bank of India (RBI) shows that in August, there were 144.2 million credit card transactions, amounting to ₹4,798 billion. Meanwhile, 357 million debit card transactions transferred ₹4,897 billion. Overall, Indians used card transactions worth approximately ₹1 trillion for grocery, electronics, apparel, and other items, representing a 43% increase from ₹7 trillion in August 2017. Bank-issued debit and credit cards are processed through payment companies like Mastercard, Visa, or RuPay, which charge a fee per transaction.