Mastercard, Visa market share falls after UPI success

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Following the demonetisation of high-value currencies (Rs.1,000 and Rs.500) by the Modi-led Government in November 2016, citizens in the country were left strapped when it came to making transactions or basic purchases, as more than 80% of the money in circulation was deemed illegal tenders overnight. While debit cards and credit cards was the alternative to cash transactions, during this period, the Modi-led Government also promoted Unified Payments Interface (UPI) as part of their digitisation drive. In fact, though UPI transactions were existing prior to the demonetisation, the swift move to counter black money in the country can almost be seen as the dawn of UPI transactions. Almost overnight, citizens moved to making transactions via the Unified Payments Interface (UPI) on their mobile phones, and merchants and businesses adopted this as well to keep their business afloat – with cash transactions almost coming to a full stop following the demonetisation.
Since the end of 2016 till date, the UPI market is close to touching the $200 billion mark, such that, its impact on the market has only resulted in a market share dip for plastic card associates such as Visa and Mastercard. As per a survey, UPI transactions halved that of debit and credit cards in just a short span of time – considering that Mastercard has been in the Indian market for almost three decades. According to Credit Suisse Group AG, in the next five years, the digital market is bound to cross the $1 trillion mark – as already 800 million Indians have linked their bank accounts to various digital service payments. Based on an evaluation done by the United States-based Fidelity National Information Services, the UPI implementation in the country scored a maximum 5 points, the only country to do so in the survey – out of 40 countries. The evaluation was done based on parameters such as round-the-clock service, settlement speed and the support of Governments and regulators.
Though India’s digital payments market is still dwarfed by China – as they have a market standing at $27 trillion, with big tech firms such as WhatsApp Pay, Amazon Pay, Google Pay and Samsung Pay getting into the fold, the future seems to be bright, but with regard to plastic card transactions, the future seems to be bleak with such strong competition from digital payments.

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