It’s in the cards: Visa and Mastercard are on a slippery slope

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Editor's note: With digital payments on a high, e-commerce volumes gaining ground and digital banking all the rage in India, you’d imagine card-issuing companies like Visa and Mastercard to be singing in the rain. Except, they aren’t.  Both companies used demonetization (the government ’s November 2016 move to invalidate all Rs 500 and Rs 1,000 currency notes) to push their cards business, but that came to an abrupt halt once the pandemic struck in 2020. The “strong medicine” of demonetization itself is now bearing fruit for young entrepreneurs and startups, but for older firms like Visa and Mastercard, the experience has soured over time. In the last year, the government-backed Unified Payments Interface, the instantaneous payments system run by the National Payments Corporation of India, processed over Rs 41 lakh crore worth transactions as of March 2021. In comparison, the total transactions on all kinds of cards added up to Rs 12.9 lakh crore.  Since the card entities earn a fee per transaction from the banks that actually issue their cards, a significant drop in card transactions translates to lower fee income.  …