With business at stake, Visa and Mastercard look for ways to survive digital payments push

Visa and MasterCard are said to be lobbying the government to make sure that they don’t lose out amid India’s digital payments push, which is being forged through homegrown applications such as the Unified Payment Interface (UPI), Bharat Interface for Money (BHIM) and now Aadhaar Pay, also known as the BHIM-Aadhaar interface.
The card companies are highlighting avenues such as QR codes and contactless payments as part of a bouquet of options to stay relevant in a cashless economy apart from the traditional avenues such as debit and credit cards. The government wants to reduce the use of cash to help track all transactions, ensure taxes are paid and root out black money.
At stake for the card companies is a business worth Rs 6,000 crore with significant growth potential, given that only 5% of India is cashless. Prime Minister Narendra Modi launched Aadhaar Pay, supported by 27 banks and 715,000 merchants, on Friday. BHIM was launched in December last year+ , weeks after demonetisation was announced on November 8 and has already registered 19 million downloads.
Top government officials across central ministries told ET that the card companies are concerned about missing potential business, especially because of the Aadhaar Enabled Payment System (AEPS), given that the unique ID covers close to 99% of the adult population and over 40 crore bank accounts are already linked to Aadhaar. The biometric-based system will allow the authentication of payments through fingerprint readers, for instance, cutting out the card companies completely.
Senior executives of the card companies have in the last two months been making their case to departments, including the Niti Aayog and the finance ministry, meeting ministers and top bureaucrats.
It’s not clear whether they’ve been getting a sympathetic hearing.
“We are not in the process of protecting the revenue of private players,” said a senior Niti Aayog official. “The government will continue to provide alternate and cheaper options to end users to enable them to board our digital payment drive.”
Niti Aayog CEO Amitabh Kant has repeatedly said cards and ATMs could become obsolete over the next few years as state-backed systems become operational and gain ground. “Credit cards, debit cards and ATMs will disappear,” he said as recently as April 1.
Visa and MasterCard however said they fully support the government’s digitisation drive and don’t seem to be too perturbed.
MasterCard said it’s held discussions with the government on expanding the payments ecosystem. “We don’t see it as a loss of business. There is enough opportunity for multiple players. Otherwise you wouldn’t have had more banks in the ecosystem or wallet operators or payment solutions,” said Porush Singh, divisional president for MasterCard in South Asia. “We haven’t seen it yet (possible impact), but yes if the consumer finds it more relevant, then we will have to start evaluating.”
Visa too is focused on expanding the market, said TR Ramachandran, group country manager, India and South Asia.
“It’s important to remember the payments industry in India is not a market share game–it is about growing the market and displacing cash,” he said. “We will continue working with the government, our clients and merchants to expand access to electronic payments in support of India’s drive to a less-cash society.”