RBI Mastercard Ban: Decoded: How RBI’s latest ban on Mastercard affects you – The Economic Times

Clipped from: https://economictimes.indiatimes.com/industry/banking/finance/banking/decoded-rbis-latest-move-to-ban-mastercard-from-issuing-new-cards/articleshow/84433861.cms?utm_source=ETTopNews&utm_medium=HPTN&utm_campaign=AL1&utm_content=23Synopsis

The RBI said that the restrictions have been imposed as in spite of lapse of considerable time and adequate opportunities being given, the entity has been found to be non-compliant with the directions on storage of Payment System Data.

In a major blow to payment services major Mastercard Asia/Pacific Pte Ltd, the Reserve Bank of India on Wednesday imposed restrictions on on-boarding of new domestic customers in the country on its card network.

The RBI said that the restrictions have been imposed as in spite of lapse of considerable time and adequate opportunities being given, the entity has been found to be non-compliant with the directions on storage of Payment System Data.

Why is the RBI imposing restrictions?

The RBI , in 2018, directed all system providers to ensure that within a period of six months, the entire data relating to payment systems operated by them be stored in a system only in India.

They were also required to report compliance to the RBI and submit a board-approved system audit report conducted by a CERT-In empanelled auditor within the timelines specified therein.

Is Mastercard the only one on the red list?
The move comes less than three months after RBI barred American Express and Diners Club International from issuing new cards due to similar violations.

But unlike American Express, which is a relatively small player in India, companies like Mastercard and Visa have partnered with many banks.

Visa and Rupay are the only card networks allowed to take in new customers now.

What does Mastercard have to say?
Mastercard in a statement late last night said, “We are fully committed to our legal and regulatory obligations in the markets we operate in. Since the issuance of the RBI directive requiring on-soil storage of domestic payment transaction data in 2018, we have provided consistent updates and reports regarding our activities and compliance with the required stipulations.”

“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.

How will this move affect you?
Mastercard will be indefinitely blocked from issuing debit, credit or prepaid cards to customers in India from July 22.

Existing customers will not be impacted.

RBL Bank – the bank hit hardest
RBL Bank’s credit card issuance rate will be impacted since it issues credit cards on the Mastercard network only.

Post the RBI directive, RBL entered into an agreement with Visa Worldwide to issue credit cards enabled on the Visa payment network.

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