Even as the government seeks to shrink fees on electronic payments and promote domestic network RuPay, MasterCard has expressed concern on regulation of cost and called for a level playing field.The payment company had said that there needs to be sharing of costs to ensure that there is security of payment systems and innovation.
Speaking to TOI, Tim Murphy, general counsel and chief franchise officer MasterCard said that the company supported the government during demonetisation.
"For the period the government asked, we waived our fees to support the very critical transition that society was going through, given the demonetisation issue. But what it comes back to is that you can't invest in payments, you can't invest in security and consumer without a reasonable return," said Murphy.
He added that payment security requirements call for increasing sophistication, particularly cross-border transactions, where the risks of frauds are 100 times more than in a face-to-face transaction in a shop.
"The important point is that under the MasterCard network, it is zero liability worldwide and the financial institution will always stand behind their customer," he said, adding that MasterCard has invested $1 billion in security innovation in the last three years.
According to Murphy, MasterCard is not at all deterred by the government's push to encourage non-card means of payment, which includes the Bhim app, which is based on the unified payment interface (UPI), and Aadhaar-enabled payment system.
"Our view is that there are huge opportunities to push electronic payments in India with 96% of transactions in cash. There is so much room for all of us to grow. Because there is so much to do, we are confident that we can compete and bring investment to India," said Murphy.
"One of the things that you have to worry about is economics. Financial institutions in particular have the consumer relationship, bear the cost of fraud and also the credit costs in credit cards. Unless the costs are shared with other stakeholders like merchants through MDR and interchange fees, you do not get the kind of vital innovation driven secure system that we have today," said Murphy.
According to Murphy, despite the push to digital, cards would continue to dominate for several years. "Today, less than 10% of MasterCard's payments are in the digital channels. This means that over 90% of transactions are a physical card used in a point of sale device or an ATM. Even with the best case of this digital revolution globally, by 2020 maybe 30% would digital and 70% would still be physical," said Murphy.
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