The RBI has barred mastercard from issuing in Asia Pacific from onboarding new credit, debit and prepaid card customers with effect from July 22 as it failed to comply with data storage norms.
The US-based network is the second-largest credit card issuer (after Visa) in India and the RBI’s stand could have implications on foreign relations. The central bank has been pushing regulated entities to store data relating to Indian customers on Indian soil since April 2018. Mastercard is the third card network to be barred by RBI this year, after American Express and Diners Club were similarly prohibited from onboarding new customers in April. This leaves just Visa and Rupay as the only card networks allowed to take in new customers.
The data storage rule enforced in 2018 mandates that payment system providers store the entire payment data in systems located only in India, except for processing cross-border payments. Data sent abroad for processing should be deleted abroad within the prescribed timeline and stored only in India.
“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.
The RBI order will not affect existing customers of Mastercard. Also, a majority of banks are not expected to be affected as they often have relations with multiple networks and thus could continue to issue debit and credit cards using Visa or Rupay networks. RBL Bank said on Thursday that its credit card issuance rate will be impacted. The lender currently issues credit cards on the Mastercard network only.
However, the bank 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.