Article appeared in Bloomberg by Andy Mukherjee (republished in Business Standard on January 17, 2023) titled "Visa, Mastercard may be allowed a share of India's online payments".
Let us reproduce the lines from the newspaper and pose a counter question:
India’s dealings with American card networks has been frosty. Visa Inc. and Mastercard Inc. have grumbled to Washington about the lack of a level playing field as New Delhi has cajoled banks to shift to a homegrown alternative.
Question: Is the author worried about Visa and Mastercard ? reason being
SBI, Axis, ICICI Bank to go live on 'Rupay Credit card on UPI' by March. Is it India's dealing frosty or Visa and Mastercard are worried that they may lose the business. Author started off with a biased mindset.
The Morning Context, the Reserve Bank of India is keen to grant Visa and Mastercard access to the country's popular online payments protocol.
Question: Is The Morning Context a widely read print / digital newspaper / magazine in India. I think even in metro cities like Mumbai, Delhi, Chennai. Kolkatta very few people have heard about The Morning Context. The reference, author is quoting is only well know to him. A quick survey with Bloomberg / Business Standard subscribers about the Morning Context will give a quick answer, forget about India as a whole,
Opening up this large and fast-growing market to the major networks will mean that credit limits will be used, without the physical cards being swiped. This could potentially be a big deal as at least some users will want to borrow for purchases, instead of using their own funds.
Question: Is the author promoting credit card by stating that credit limits will be used. Is he pleading that please allow Visa and Mastercard to be joined in UPI by stating at least some users will want to borrow.. very disappointing. Author has to understand use of physical cards are very less than the QR codes in terms of usage.
It’s a duopoly that makes the Indian government nervous. Today, New Delhi and Washington have a common interest in countering Beijing. Tomorrow, the alignment might shift. If the US tries to use payment as a foreign-policy lever, taking a leaf from sanctions against Russia, then India must be able to soften the blow.
Question: UPI is Indian product for Indian citizens, why Washington and Beijing should be brought in along with Russia. Author: are you threatening India by playing Chinese card? once again very disappointing.
Finally, the motive of the article is clear:
At present, UPI spending comes out of consumers’ savings accounts. From a user’s perspective, scanning a QR is equivalent to paying a business in cash — without having to visit an ATM. From a bank’s standpoint, however, deposits are costly; account holders have to be paid interest. And then the lender has to go and earn a spread. However, if some purchases move to credit cards, the bank providing the loan immediately acquires a lucrative asset and starts praying that the customer won’t pay the full-statement amount. Out of the 2 per cent transaction charge, the cardholder’s bank earns four-fifths; the remaining gets shared between the retailer’s bank, the NPCI … and the card networks. Everyone makes money. So that when the state subsidies to popularize online payments end, all debit transactions can still remain free.
Question: There is no question for above statement where the intention of author is crystal clear, promoting Credit Card vide Visa and Mastercard. Author is worried when spending comes out of consumers saving account, is it bad if the consumer is conscious about the cash he is spending. It appears the author wants customer to use credit card.
What is the relevance of the this line or connection with Visa / Mastercard : From a bank’s standpoint, however, deposits are costly; account holders have to be paid interest. And then the lender has to go and earn a spread. Author: where is the deposit involved and it is costly. In fact use of credit card is costly to the customers which you are not stating. On the contrary author is explaining how the 2% charge will be shared, nowhere mentioning about the interest rate charged by the credit card companies to customers on delayed payments.
Articles by Andy Mukherjee in Bloomberg was well covered under "
Gems of Andy Mukherjee: Bloomberg columnist whose hot takes on India should be free for all and put in museum for everyone’s enjoyment".
