The Reserve Bank of India barred Mastercard from onboarding any new domestic customer from July 22. The directive bars the US-based network from issuing either prepaid, credit or debit cards to new customers under its network in India. Mastercard is the second largest credit card issuer (after Visa) in India and the central bank’s tough stance could have implications on foreign relations. The RBI has been pushing all regulated entities to store data relating to Indian customers on Indian soil since April 2018.
Notwithstanding 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,” the RBI said in a statement. While it is banks and finance companies that issue cards, they partner either Mastercard, Visa or RuPay for network usage. Whenever a card is swiped, the processing takes place on the payment network cloud. Mastercard has been directed to advise all card-issuing banks and non-banks to conform to these directions. The RBI said the order will not impact existing customers of Mastercard.
“Mastercard is 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,” the company said.
In terms of the number of employees, India ranks second among all markets for Mastercard. The company has invested $1bn in India and has announced plans to invest $1bn more. “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,” the statement added. Mastercard is the third US company to face an RBI ban after American Express and Diners Club, which faced similar restrictions in April. Amex has said that while it is not accepting fresh applications, it is committed to complying with all regulations.