Visa complains to US govt about India backing local rival RuPay

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• Visa  has complained to the U.S. government that India's "informal and formal" promotion of domestic payments rival RuPay hurts the U.S. giant in a key market.
• The issue was raised by Visa  during a meeting between US Trade Representative (USTR) Katherine Tai and company executives, including CEO Alfred Kelly.

Background to the Issue 

• Visa does not issue any type of credit cards or debit cards to the customer.
• Visa is a digital platform which connects card issuing authorities(banks), customers who are using the cards and the merchants in whose shop the card is used for shopping purposes.
• Visa provides a secure online communication network  through which these types of online transactions take place .

How does Visa earns money:

• The bank which uses Visa service and issues Visa branded cards pays fees to the Visa for the technology. The merchant which is accepting Visa cards has to install a Point of Sale Terminal(POS) which is supported by the Visa technology . If that POS is used for a transaction then the merchant has to pay commission to the Visa. 

Why Government Promotes Ru-Pay

• During Manmohan singh government period, the government of India planned to launch “Financial Inclusion” programme with the aim of including the unbanked population of india within the banking system  To keep the cost of banking operation low  so that it could be affordable to the poor, the emphasis was on maximum possible use of digital technology for payment purpose.
• But the technology was controlled by the foreign companies like VISA,Mastercard etc which was  very costly for India  and hence not suitable for the financial inclusion programme.
• Government asked RBI to develop this technology which in turn  asked National Payment Corporation(NPCI)  and Indian Bank Association to develop a digital payment system which was safe and secure.
• They developed an indigenous payment system , RUPay which stands for Rupee and Payment . The Government of India has made it mandatory for the banks to issue Ru-pay cards for every Jan Dhan account opened in India under the financial inclusion programme.
• The preference of the government of India for the Ru pay system means a loss of business to foreign companies hence Visa  is complaining to the US government .