Reserve Bank of India (RBI) has indefinitely barred Mastercard from issuing new debit, credit or prepaid cards to customers in the South Asian market over noncompliance with local data storage rules.
India’s central bank said the new restrictions will go into effect on July 22. RBI said in a statement that, “Notwithstanding the lapse of considerable time and adequate opportunities being given, the entity has been found to be noncompliant with the directions on Storage of Payment System Data.”
The new order won’t impact existing customers of Mastercard, which is one of the top three card issuers in India, RBI said. “Mastercard shall advise all card-issuing banks and non-banks to conform to these directions,” it said.
The supervisory action has been taken in the exercise of powers vested in RBI under Section 17 of the Payment and Settlement Systems Act, 2007 (PSS Act), the RBI said.
Mastercard is a Payment System Operator authorised to operate a Card Network in the country under the PSS Act.
Last year, Mastercard accounted for 33% of all card payments in India, according to London-based payments start-up PPRO quoted by AFP news agency. In 2019, the firm announced an investment of $1bn over the next five years as part of its expansion plans in India.
This isn’t the first time India’s central bank has penalised a firm for noncompliance with local data-storage rules, which were unveiled in 2018 and mandated compliance within six months. The rules require payments firms to store all Indian transaction data within servers in the country.
In April, RBI restricted American Express and Diners Club from adding new customers, citing violations of the same rules.
Visa, Mastercard and several other firms have previously requested New Delhi reconsider its rules, which they have argued are designed to allow the regulator “unfettered supervisory access.”
The central bank directive in 2018 sparked an aggressive lobbying effort from US firms who said the rules would increase their infrastructure costs and hit their global fraud detection platforms.
The order comes as firms such as Mastercard and Visa also face growing competition from domestic payments network Rupay.
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