By Aditya Kalra

NEW DELHI (Reuters) – Visa Inc (NYSE:) complained to the U.S. government about India’s promotion of RuPay, a domestic payment rival, in a crucial market. Memos seen by Reuters reveal that.

Visa, in public, has dismissed concerns over RuPay’s rise. This has been made possible by the public lobbying of Prime Minister Narendra Modi. It has also included likening RuPay to national service.

U.S. government memos reveal that Visa expressed concerns over India’s “level playing fields” during an Aug. 9, meeting between Katherine Tai (USTR), and senior executives of the company, including Alfred Kelly.

Mastercard Inc. (NYSE:) raised similar concerns with the USTR privately. Reuters reported in 2018 that the company had lodged a protest https://reut.rs/3cQA2La with the USTR that Modi was using nationalism to promote the local network.

According to a USTR memo Tai received before the meeting, Visa expressed concern about India’s formal and informal policies.

Visa, USTR Modi, Modi’s bureau and the NPCI declined to comment.

Modi has been promoting RuPay, an Indian payment system for over a decade. It poses a challenger to Visa or Mastercard in an ever-growing market. RuPay represented 63% of India’s 952,000,000 debit and credit cards in November 2020 according to latest regulatory data. That’s up from 15% in 2017.

Kelly stated publicly in May that there had been “a lot concern” over RuPay being “potentially problematic for Visa” for many years, however he maintained that RuPay was India’s largest market leader.

We’ll continue dealing with this issue and we have been doing so for years. “There’s nothing new here,” he stated to an industry gathering.

« ‘NOT SO SO SUBTLE’

Modi described RuPay’s use in 2018 as patriotic. He said that “everyone can not go to the frontier to protect the country,” and suggested RuPay could be used to help the nation.

Visa voiced concerns at the USTR meeting on Aug. 9. It cited “speech by the Indian leader where he basically called upon India to use RuPay to show service to the country” according to an exchange of emails between U.S. officials following the readingout.

Nirmala Sitharaman, Finance Minister, stated last year that RuPay was the only credit card banks should encourage. RuPay is the preferred method of payment for public transportation.

According to industry sources, RuPay has the largest number of Indian cards, however, transactions continue to be processed through Visa and Mastercard. Most RuPay cards are issued by banks in Modi’s financial inclusion programme.

Visa stated to the U.S. that they were concerned about India’s use of RuPay-linked transit cards as well as “the subtle pressure upon banks to issue RuPay card cards”, according to an USTR email.

Mastercard (Visa) and Visa see India as a significant growth market. But, the 2018 directive from the central bank to them for payments data storage “only” in India for “unfettered supervisory accessibility”, has woken them up.

Mastercard is facing an indefinite ban from India on the issuing of new cards after India’s central bank declared it had not adhered to the 2018 rules. In September, Reuters reported that a USTR official called the Mastercard ban “draconian”.