A terrific story from Reuters this morning is going to cause ructions for US business Mastercard. The payments company will be digging in for a losing battle after Reuters got sight of a note showing that Mastercard complained to the US government about Indian protectionism and nationalism because India's RuPay domestic network was eating into Mastercard's Indian profits. "Modi has in recent years backed India's homegrown payments network "RuPay", whose rise has broken the dominance of U.S. payment giants such as Mastercard and Visa," writes Reuters. "More than half of India's 1 billion debit and credit cards now go through the RuPay payment system, and that means companies such as Mastercard face an uphill task to expand rapidly in one of the world's biggest payments growth markets." Mr Modi has endorsed the RuPay network, saying fees earned from RuPay would remain in India and go towards construction projects such as schools and hospitals. The note, seen by Reuters, shows Mastercard doubling down by criticising India's payments promoter, the NPCI. "The NPCI acted both as 'a quasi-regulator and a competing payment network', Mastercard said, adding that this was 'compounded by the government's open preference for RuPay with misleading statements and inaccurate information on pricing, despite Mastercard being priced lower than RuPay'."
Indeed, India's halting steps towards financial inclusion via digitalisation, has seen a surge in popularity of mobile wallets such as Patym, and as we've noted recently, African governments have been taking note, with Nigeria set to introduce payments banks, an NPCI initiative. Is Malawi set to follow suite? "Malawi's policy makers, through the Reserve Bank of Malawi (RBM) and other stakeholders, are working on a law that will force companies in the country to accept at least one form of digital payment. Interestingly, this announcement comes at a time when mobile money accounts in the Southern Afrikan country have reached 5,1 million (as of August 2018 according to RBM) yet most transactions with businesses remain cash based." Read more here.
Three more banks in the UAE will merge, according to local sources, in the latest in a slew of mergers inside and outside the banking business. "In the latest deal, listed lenders ADCB and UNB are considering combining with privately held Al Hilal Bank to create the fifth-largest bank in the GCC," Bloomberg reports. ADCB confirmed the Bloomberg story. With oil prices failing to gain strength, and leaving the government coffers bare, the region's lenders are feeling the squeeze. On top of that, the UAE is introducing VAT and new accounting rules. Last year, Abu Dhabi's major banks National Bank of Abu Dhabi and First Gulf Bank merged to form First Abu Dhabi Bank. It won't be the last merger we'll see in the region in the coming months and years.
First Abu Dhabi Bank scored three stars out of five stars on the 2018 Lafferty Banking 500 report.
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