Visa, Mastercard Threatened By Meteoric Rise of Aadhaar Pay & UPI; Rs 6000 Cr Market In Danger?


Visa Mastercard vs Aadhaar UPI

Traditional payment processing and payment card companies, Visa and Mastercard, are feeling threatened now, and the reason is the exponential rise of Govt. backed digital payment platforms: Aadhaar Pay and UPI, which combined with BHIM App is giving these companies sleepless nights.

As per reports emerging, representatives of these companies are trying to meet with senior Govt. officials, to make sure that they are not ignored in this cashless mission.

One senior Govt. official said, “Aadhaar Pay will be like India’s own solution to the cashless economy. Lots of players such as Visa, MasterCard are shaken up and there is a big war going on. But the government is very clear and wants to just bulldoze ahead with it.”

After all, Rs 6000 crore is at stake here, which is estimated to be Visa and Mastercard’s potential market size in India.

But it seems that Govt is in no mood to assist private players in this highly competitive niche. Earlier, these companies were threatened with the rise of RuPay cards in India.

What will Visa and Mastercard do now, to protect their territory?

Visa, Mastercard Shaken & Stirred Due To Aadhaar Pay, UPI & BHIM

Payment processing companies like Visa and Mastercard charge 1% on every transaction which is happening on their platform. And currently, Rs 6 lakh crore is the size of digital transactions, as estimated by the Govt.

Hence, the market size and potential of revenues for Visa and Mastercard is Rs 6000 crore.

But due to the immense popularity of UPI-based transactions, and the recent launch of Aadhaar-based BHIM App for merchants have induced fear among these traditional payment processing companies.

And the reason is that UPI and Aadhaar Pay doesn’t give any transactions fees to Visa or Mastercard.

Another Govt. official said, “Card companies get 1% commission is which is around Rs 6,000 crore market for the likes of Visa, MasterCard and Rupay. Since UPI, BHIM and Aadhaar Pay don’t give this commission to them, they think it’s a big loss to them of the potential business.”

Hence, these companies are feeling ignored, and out of the digital ecosystem of India.

As per reports coming in, officials from these companies are making rounds of Niti Ayog office, and Finance Department for seeking more collaboration and partnerships. But Govt. is in no mood.

One official from Niti Aayog said, “We are not in the process of protecting the revenue of private players. The government will continue to provide alternate and cheaper options to end users to enable them to board our digital payment drive.”

Note here, that earlier this month, Amitabh Kant, CEO of Niti Aayog had declared that in future, ATMs and Credit/Debit cards will disappear; and only mobile wallets and Aadhaar based payment mechanism will survive.

The fact that Aadhaar Pay is supported by 27 banks and 715,000 merchants within weeks of its launch, 19 million people are already using BHIM App is not good news for Visa and Mastercard.

Visa, Mastercard Puts Up A Brave Face

Meanwhile, both Mastercard and Visa officials in India have put up a brave face and have assured that there is nothing to worry, despite the fact that Aadhaar already covers 99% of Indian population, 40 banks are already linked with Aadhaar.

Porush Singh, divisional president for MasterCard in South Asia said, “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. We haven’t seen it yet (possible impact), but yes if the consumer finds it more relevant, then we will have to start evaluating.”

On the other hand, Visa is devising plans to work with the Govt., in order to take the digital story forward. TR Ramachandran, group country manager, India and South Asia 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.”

In order to stay relevant in the market, both of these companies have launched innovative schemes, such as QR Code based payments, and contactless payment interface. Last year, talks were on regarding a massive collaboration to combine forces of Visa, Mastercard and BharatQR code into one.

As per Govt. estimates, cashless payment ecosystem will increase from Rs 6 lakh to Rs 90 lakh crore in few years. But, will Visa and Mastercard be relevant then?

Do let us know by commenting right here!


  1. Srini says

    Awesome! The amount of harrasment one had to put up with to get a credit card, even though all records were fine…all that will come to an end now.

  2. Ram says

    Who are these faceless officials who are so terrified. The common Indian is suffering from modis attempts at trying to default on printing currency after the failed attempts at proving Indians have tons of black money what choice does he have but to show some miniscule profit. A profit solid notes eat into. After all its just the whole nation who uses notes for both business and pleasure

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