The RBI took this decision owing to the company’s failure to comply with data storage norms.
With effect from July 22, the Reserve Bank of India (RBI) has barred Mastercard Asia Pacific from onboarding new credit, debit and prepaid card customers. The decision was taken owing to the company’s failure to comply with data storage norms.
The RBI’s stand could have implications on foreign relations as the US-based network is the second-largest credit card issuer (after Visa) in India. Since April 2018, the RBI has been pushing regulated entities to store data relating to Indian customers on Indian soil.
Mastercard Not Only Company
After American Express and Diners Club were similarly prohibited from onboarding new customers in April, Mastercard is the third card network to be barred by RBI this year. After the ban of Mastercard, now Visa and Rupay are the only two card networks allowed to take in new customers.
Data Storage Rule 2018
Enforced in 2018, the data storage rule mandates that payment system providers store the entire payment data in systems located only in India, except for processing cross-border payments. Within prescribed timeline, data sent abroad for processing should be deleted abroad, and stored only in India.
What did Mastercard say?
“While we are disappointed with the stance taken by the RBI in their communication dated July 14, we will continue to work with them to provide any additional details required to resolve their concerns. Building on our considerable and continued investments in India, we remain committed to working with our customers and partners in advancing on the government’s Digital India vision,” Mastercard said.
Existing customers of Mastercard will not be affected by the RBI decision. Since, majority of banks have relations with multiple networks, they are not expected to be affected by this decision, and thus could continue to issue debit and credit cards using Visa or Rupay networks.
Impact on RBL Bank
On Thursday, RBL bank said its credit card issuance rate will be impacted. The bank currently issues credit cards on the Mastercard network only.
RBL bank, however, expects to start issuance of credit cards on the Visa payment network post the technology integration which is expected to take 8 to 10 weeks.