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Mastercard to invest $1bn in India.

Date: 07-05-2019
Subject: Mastercard to invest $1bn in India
MUMBAI: Payments company Mastercard  has said it will invest an additional $1 billion in India, nearly a third of which will go towards building a payments processing node that goes beyond its commitment to the Reserve Bank of India (RBI) on storing data in the country. This is in addition to the $1 billion the US giant has already pumped into India in the last five years, a large part of which is for providing technology and back office support to global operations.

Speaking to TOI, Mastercard co-president (Asia-Pacific) Ari Sarkar  said in the last five years, the company has made a fundamental shift in its presence in India. “From 30-odd people in essentially a sales and distribution organisation, we have grown to over 2,000 people here, representing 14% of our global workforce. We have technology centres in Baroda, Pune and Gurgaon,” he said.

“Our technology hub is going to see an investment of $300-350 million. We are still working on details of the exact location — my sense is that it will be in Pune and Baroda as we do not want to create new cities,” said Sarker. “The RBI has very clearly said it wants only data localisation and data residency in India. We are going beyond that by creating processing capability in India. And we’re doing that for business-competitive reasons,” said Sarker.

“Creation of this global node in India will give us complete flexibility to bring any innovation to India. This is being done with our business-competitive lens on, and not be constrained in bringing new innovations after we are able to replicate everything in the local market,” he said. “Given that it connects to our global network, we will then evaluate how we load balance and move our global traffic so that we can use the India node for other markets as well,” said Sarker.

For Mastercard, India is not just about having more of its cards or having more swipe machines. It is also a market where it can deploy its financial infrastructure capability, something which the RBI is looking at opening up for competition to reduce the ‘single-point failure’ risk. Mastercard is one of the largest providers of automated clearing house services and is building an Asia-Pacific hub in Singapore and is looking to provide similar services in India. “Even as we are digesting the notification from the RBI, we are increasing our capability in India,” said Sarker.

He said that the new areas including providing service layers on top of payments solutions that will address pain points of micro-merchants and micro-SMEs. Instead of merely enabling payments, it will also facilitate analytics and help small merchants avail credit from banks.

Mastercard is already doing high-end technology development locally. “We have a mobile centre of excellence, our artificial intelligence-based analytics capability and we are also working on cybersecurity issues from here,” said Sarker. Mastercard Labs — the R&D arm based in Pune — works with several startups. In the last one year, Mastercard decided to shift focus to smaller, newer companies and provide them access and funding between $250,000 to $2 million. The payments company has invested in startups like Tone Tag and FTcash, and has recently concluded an investment in a company called Signzy. “We are not only investing in fintechs and providing them technology, we are also taking them to our global markets,” said Sarker.

On the slowing down of card payments after a spike in demonetisation, Sarker said, “Historically cash has been around 12% of GDP. While cash is back, as a percentage of GDP, it is roughly 10.5%. So I think there clearly has been a momentum shift towards digital, and demonitisation  has added that impetus,” he said.

Source: timesofindia.indiatimes.com

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