Mumbai: The Verdict Visa, master card And PayPal has drawn attention to the Indian financial system’s preparedness for its denial of service to suspend its services in Russia as part of the sanctions. While some efforts to protect the economy from oligopoly have paid off, according to experts, India is still untouched to the same level as China.
India is no stranger to sanctions or denial of services. The country faced sanctions in the wake of the 1998 nuclear tests. Subsequently, Indian oil companies dealing with Iranian crude took risks, with insurance companies facing second-order effects as they could not get reinsurance support to cover companies refining Iranian oil. In recent days, insurers have been exposed again as global reinsurers are refusing to provide a cover for thermal power plants that use coal.
“In the world of payments, India has built up substantial capacity since the launch of the RuPay debit card under NPCI to process far more transactions than Visa / MasterCard,” said a regulatory source. The ATM network also remains untouched as it does not depend on the global network as all banks are required to be members of the domestic network. Similarly, account-to-pay through Unified Payments Interface (UPI) -Account transfer and acquisition of these transactions are also done on domestic payment rail.
However, when it comes to credit cards, the Indian market is dominated by visa-mastercard Monopoly While RuPay debit and credit cards will work in India, cardholders will have problems with overseas transactions as the Indian card network is not an international or regional network like China’s UnionPay. In Russia, there are reports that local banks will start issuing cards on their home Mir network with UnionPay – China’s multinational payment network.
In India, RBI has emphasized on storing data locally on payment networks. Visa has followed through after spending hundreds of millions of dollars. Mastercard is facing a ban by the regulator from issuing new cards. “However, data localization does not mean that continuity of services can be maintained if a multinational player decides to withdraw,” the official said.
Officials said as things stand, withdrawal of services by payment networks would lead to a disruption of six months to a year in providing alternate card networks to banks. On the payment acceptance side, almost all merchants sign shops on all three networks including acquisition bank RuPay, which means there is no disruption at the merchant-end. While UPI does not have a cross-border dependency, two payment apps owned by multinational companies – Google Pay and PhonePe – account for a disproportionate share of UPI transactions.
Lastly, a large part of the fintech infrastructure in India is created by startups that are on the back of funding from multinational private equity firms. Incidentally, in the wake of the Russian crisis, some fintechs have received questions from investors about their investments in Russia.
India is no stranger to sanctions or denial of services. The country faced sanctions in the wake of the 1998 nuclear tests. Subsequently, Indian oil companies dealing with Iranian crude took risks, with insurance companies facing second-order effects as they could not get reinsurance support to cover companies refining Iranian oil. In recent days, insurers have been exposed again as global reinsurers are refusing to provide a cover for thermal power plants that use coal.
“In the world of payments, India has built up substantial capacity since the launch of the RuPay debit card under NPCI to process far more transactions than Visa / MasterCard,” said a regulatory source. The ATM network also remains untouched as it does not depend on the global network as all banks are required to be members of the domestic network. Similarly, account-to-pay through Unified Payments Interface (UPI) -Account transfer and acquisition of these transactions are also done on domestic payment rail.
However, when it comes to credit cards, the Indian market is dominated by visa-mastercard Monopoly While RuPay debit and credit cards will work in India, cardholders will have problems with overseas transactions as the Indian card network is not an international or regional network like China’s UnionPay. In Russia, there are reports that local banks will start issuing cards on their home Mir network with UnionPay – China’s multinational payment network.
In India, RBI has emphasized on storing data locally on payment networks. Visa has followed through after spending hundreds of millions of dollars. Mastercard is facing a ban by the regulator from issuing new cards. “However, data localization does not mean that continuity of services can be maintained if a multinational player decides to withdraw,” the official said.
Officials said as things stand, withdrawal of services by payment networks would lead to a disruption of six months to a year in providing alternate card networks to banks. On the payment acceptance side, almost all merchants sign shops on all three networks including acquisition bank RuPay, which means there is no disruption at the merchant-end. While UPI does not have a cross-border dependency, two payment apps owned by multinational companies – Google Pay and PhonePe – account for a disproportionate share of UPI transactions.
Lastly, a large part of the fintech infrastructure in India is created by startups that are on the back of funding from multinational private equity firms. Incidentally, in the wake of the Russian crisis, some fintechs have received questions from investors about their investments in Russia.