The U.S. card networks have been trying to gain a foothold in the huge Indian payments market for years, and both Visa and MasterCard have upped the ante in the past year by opening development centers to launch new payments technology directly into the market.
Visa has opened a new development center in Bangalore and has introduced a new mobile payment service in partnership with a handful of major banks in India. That follows MasterCard, which in February opened its largest non-U.S. technology hub in Pune.
The new mobile payments service, mVisa, will go into pilot this summer with merchants in the Bangalore region and customers from Axis Bank, HDFC Bank, ICICI Bank and State Bank of India.
Consumers will download the mVisa app to a smartphone or feature phone and link a Visa debit, credit or prepaid account. Consumers can pay in stores and online by initiating a transfer from their account to the merchant's account. mVisa users can also pay bills and send funds to other Visa account holders. The transactions will be processed by VisaNet, and users are notified by text message when a payment has been received.
Visa's 100,000 square foot facility will host 1,000 Visa developers and will be part of the Bagamne World Technology Center, a 70-acre campus near Bangalore. Visa plans to open several other facilities in the U.S. and Asia and is adding a total of 2,000 new full-time employees to work in development centers in India, Singapore and the U.S.
Visa faces competition in India with Mastercard and RuPay, a national network that's backed by the government. India does not forbid outside networks, though Indian government encourages the use of its national system.
Both card networks also face a deep entrenchment of cash payments. The networks hope to take advantage of the high mobile phone use in India to build a credit card market, leapfrogging the brick-and-mortar card infrastructure found in the U.S., in a manner similar to that of mPesa and other mobile money initiatives.
Visa has worked in the past with Monitise, ICICI and MDFC Bank on a mobile payments venture that covered more than half of India's addressable card market.