The Reserve Bank of India (RBI) on Thursday said that it has lifted an 11-month ban on the issuance of new cards by MasterCard after the card network met with the required regulatory compliances on data storage guidelines.
“Given the satisfactory compliance demonstrated by Mastercard Asia / Pacific Pte. Ltd. with the Reserve Bank of India (RBI) circular dated April 6, 2018, on storage of payment system data, the restrictions imposed, vide order dated July 14, 2021, on on-boarding of new domestic customers have been lifted with immediate effect,” the central bank said in a statement.
One of the largest card schemes operating in India, MasterCard was barred from onboarding new domestic customers for debit, credit, or prepaid cards, starting July 22, 2021.
While taking action against the company, the RBI had said that despite being given considerable time and adequate opportunities to comply with regulatory norms on payment system data, MasterCard was found to be non-compliant with them.
However, credit and card firms with global operations have been resisting the move, citing costs, security risks, lack of clarity, timeline, and the possibility of data localization demand from other countries.
The RBI said Mastercard was non-compliant with directions on Storage of Payment System Data.
On April 6, 2018, the RBI said it had observed that not all system providers stored payment data in India. There had been considerable growth in the payment ecosystem in the country, it said.
Such systems were also highly technology-dependent, which necessitated the adoption of best-in-class safety and security measures continuously, the RBI had said.
The central bank said system providers must ensure that all data related to payment systems operated by them are stored in a system only in India.
This data should include complete end-to-end transaction details and information collected, carried, and processed as part of the message and payment instructions.
The RBI added that for the foreign leg of transactions if any, the data can also be stored in the foreign country if required.
About Mastercard
Mastercard is a payment system operator, operating a card network in the country under the Payment and Settlement Systems Act. Along with Mastercard, Visa and RuPay are the three big card networks in the country.
According to industry estimates, Visa is the largest player in the space followed by Mastercard and RuPay. But, RuPay is fast catching up with its global peers as public sector banks in India are issuing more RuPay cards.
While there is no official data on the market share of these card networks in India, industry estimates suggest Visa has around 44 percent market share, followed by Mastercard with 36 percent, and Rupay with 20 percent.
Similar Restriction
India’s central bank had imposed similar restrictions on Diners Club and American Express, wherein they were barred from onboarding new customers.
While the restrictions on Diners Club were lifted in November last year, those on American Express continued.
The ban on Mastercard impacted YES Bank, RBL Bank, and HDFC Bank the most as a majority of their cards were issued on Mastercard’s network.
Following the embargo, these card-issuing banks had to move to other networks but there was an immediate slowdown in the run rate of cards issued by these players with the embargo imposed on Mastercard.
