Visa and Mastercard are having ‘second thoughts’ on their participation in the Reserve Bank of India (RBI) provision for New Umbrella Entities (NUEs) after many legal experts signalled “conflict of interest” with their own payments businesses.
Both global payments giants are part of consortiums using the NUE route to compete against the National Payments Corporation of India’s (NPCI) unified payments interface (UPI).
But, legal experts advising these consortiums have now flagged matters that could cause conflict of interest, four sources told The Economic Times.
Moneycontrol could not independently verify the report.
“The fear emanates mainly from the consortiums, which are very cautious at a time when the competition has become tough,” one source said.
As per a second source, concerns first rose after the finance ministry dissuaded the State Bank of India (SBI), HDFC Bank and Bank of Baroda (BoB) consortium from partaking in the NUE facility, on grounds that it does not want public sector banks competing with the NPCI’s products.
Two participants also raised concerns on whether payments giants can be a part of NUE, a senior executive told the paper. Adding: “In absence of any clarity for now, it was decided that it’s only wise to first get the licence and then approach this problem.”
Consortiums have till March 31, to submit bids for NUEs to the RBI after the deadline was extended from February 26. Sources added that both payments firms are in talks with multiple consortiums.
MasterCard and Visa did not respond to queries, as per the report.