Neo-socialism: State’s expanding tech biz

News: Reuters recently reported that Visa Inc. had complained to the US government about India’s “informal and formal” promotion of domestic payments rival RuPay.

In this context, state’s direct intervention in digital tech initiatives has been criticised by some as socialisation of fintech.

What complaints have been raised by Visa Inc and Master card?

Mastercard Inc, way back in 2018 had charged India’s PM of using nationalism to promote RuPay. For instance, in 2018, Indian PM had declared the use of RuPay patriotic.

Visa recently complained that, the phenomenal increase in the use of RuPay card is a result of India’s informal and formal policies supporting it. For instance, the government had abolished the merchant discount rate (MDR) on transactions using the RuPay debit card and the UPI from January 1, 2020.

How has govt promoted the use of RuPay and UPI?

Along with PM, Union Finance Minister has also supported the use of RuPay when in 2020, she said that RuPay is the only card banks should promote.

Govt also abolished MDR (Merchant Discount Rate) for RuPay transactions from 1st Jan 2020, while for Mastercard or Visa debit card, merchants are charged an MDR of 0.4-0.9%.

Further, all Indian companies with an annual turnover exceeding Rs 50 crore have to compulsorily offer RuPay payment options to their customers.

What are the technological initiatives launched by the government in fintech?

Esanjeevani: The government launched a telemedicine platform, esanjeevani.in. It allows anyone to register, consult a doctor, and download a prescription.

Village-level retail chain: Recently, the government launched a desi, rural version of Big Basket by creating a village-level online retail chain. This ambitious plan is being led by the Common Service Centres.

BHIM: Apart from the UPI and RuPay, the government had launched the payment facility Bharat Interface for Money (BHIM).

Bharat Bill Pay System: National Payments Corporation of India (NPCI) launched the Bharat Bill Pay System, a single platform for all utility biller.

BharatNet: the launch of BharatNet to provide a minimum of 100 Mbit/s broadband connectivity to all 250,000-gram panchayats in the country, covering nearly 625,000 villages.

The author of this article mentions that he is neither in support nor in opposition of these initiatives.

And that he merely wants to point out that while govt wants to sell its share in PSUs and public sector banks, it is venturing deep into fintech business itself. 

This, as per the author, has implications for data gathering and privacy.

Source: This post is based on the article “Neo-socialism: State’s expanding tech biz” published in Business Standard on 6^th Dec 2021.