In a dramatic and unexpected move, Mumbai-based State Bank of India has scrapped its plans to form a joint venture with U.S.-based Elavon Inc. and Visa Inc. to enter the merchant-acquiring business.

The bank revealed its intention in a Jan. 3 filing with the Bombay Stock Exchange (on which it is listed), saying it had cancelled negotiations for establishing the joint venture with the two companies.

The bank gave no reasons for canceling the project, and PaymentsSource calls and emails to the two other parties went unanswered as of deadline.

However, a source at the bank’s alternate channels department, speaking on the condition of anonymity, tells PaymentsSource the parties could not agree to the terms related to certain aspects of the joint venture. Visa, for example, refused to share any technology expertise with the bank, he says.

“I am told that senior bank officials then raised a proposal internally to call off the venture,” he adds. “I do not think they will come back to the talking table with Visa, but they might be open to partnerships with others.”

The cancellation comes as a surprise because the venture received regulatory approval from the Reserve Bank of India to establish the acquiring business, SBI Payment Services. The companies announced their joint-venture plans in May, with the bank saying it expected to set up 600,000 point-of-sale terminals across the country within five years.

The number of POS terminals in India at the end of March totaled 600,000, according to survey data from the central bank and Atos Worldline S.A./N.V.

Axis Bank Ltd. dominates the market with 183,000 terminals, followed by ICICI Bank Ltd. with 180,000 terminals and HDFC Bank Ltd. with 120,000 devices. Combined, the three banks control 80% of the market’s terminal deployments.

ICICI Bank runs ICICI Merchant Services, a joint venture between ICICI Bank and First Data Corp. that runs an acquiring business.

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