Visa vs Mastercard: What’s the Difference?
US trade authorities, at the request of Mastercard and Visa card networks late last year, persuaded Indonesia to loosen the rules governing its internal payment system..
The changes will allow US companies to process credit card transactions without the need to partner with a local Indonesian company, Reuters sources said..
This was a major lobbying victory for US payment companies in attempts to change the rules of the game in Asia and other countries regarding the storage of data or the promotion of local payment networks that compete with foreign players..
The measures taken to lobby the interests of payment systems in Indonesia were detailed in more than 200 pages of emails between the US trade authorities and the leaders of plastic card companies that Reuters received under the US Freedom of Information Act..
Emails dated between April 2018 and August 2019 also revealed that Mastercard had lobbied the US Trade Representative Office (USTR) against new data processing rules and local payment systems in India, Vietnam, Laos, Ukraine and Ghana. Emails reveal that Visa has also been implicated in several similar discussions..
Indonesian regulations required foreign firms to process credit and debit card transactions domestically in partnership with a local partner in Indonesia’s payment network known as the National Payment Gateway (NPG). The decision would hit companies, cutting their revenues in Indonesia.
The US trade authorities have made the rule change a major requirement for Indonesia to maintain a privileged trade status known as the Generalized System of Preferences (GSP), three Indonesian officials and two industry sources involved in the negotiations told Reuters. GSP Membership Provides Lower Tariffs For Indonesia’s Exports To The United States At $ 2 Billion Per Year.
As a result, Indonesia’s central bank agreed to exclude all credit card transactions from NPG, sources said..
Mastercard and Visa did not respond to questions from Reuters about their lobbying efforts. Mastercard said in a statement that any regulatory change in Indonesia «to support the participation of global partners is the result of agreements between the US and Indonesian governments as part of their ongoing negotiations».
Visa stated that «Engages with governments around the world regularly to promote the value of digital payments and advocate for open markets, free trade and global competition».
USTR has long advocated for Mastercard, Visa and American Express to have unlimited access to developing countries, especially China, where they cannot operate independently in the yuan-denominated currency card market..
China’s reluctance to issue licenses to US card companies is one of the many market access issues currently under discussion in the US-China trade negotiations held by the USTR..