RuPay and Financial Inclusion in India

US lobby machine in full swing in India as MasterCard and Visa feel the heat of competition. Indian government's attempts at financial inclusion for its population are now drawing criticism from foreign firms who were presumably not so inclusive in their business model. Were Visa and MasterCard giving cards on the basis of trying to be more inclusive to the Indian population?

Economic Times reports that US card companies MasterCard and Visa have complained of an invisible mandate to keep them out of Jan Dhan Yojana, the government's financial inclusion programme, and demanded a level playing field with government-backed card issuer RuPay. 

Stung by a sharp rise in cards issued by RuPay, thanks to Jan Dhan, MasterCard and Visa say they have asked Reserve Bank and the government to consider their services, which are cheaper than that of the local card issuer. 

Ari Sarker, co-president, Asia Pacific, MasterCard, said his company wants to get an equal opportunity to participate in Jan Dhan Yojana, touted by the government as the world's biggest financial inclusion programme. He added that banks are aware of their cost but cannot do anything as there appears to be a mandate in favour of RuPay. He added that their pricing is 30% cheaper than the national scheme for 90% of the market comprising ATM transactions. 

"The market is not open and competitive in its entirety, only in parts," Sarker said in an interview. "It is not that nobody was interested in this space, and therefore, by default, the government was left with no choice (but to give NPCI the mandate to issue new cards). Banks are aware but there is an invisible mandate that we are not able to play in that space," Sarker said. MasterCard cut prices in 2014 as it shifted focus from higher margins to larger volumes noting an increase in number of digital transactions. 


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