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In an unprecedented move, the Reserve Bank of India (RBI) has imposed a ban on MasterCard from issuing new debit and credit cards in the country. This originates because of non-compliance with its April 2018 circular that directed all payments data be stored exclusively in India, allowing the regulator “unfettered supervisory access” to transaction details. As per the rule, Mastercard was required to store Indian payments data within the country so that the regulator had an “unfettered supervisory access”. This ban will start from July 2022.
The move comes less than three months after India’s central bank barred American Express and Diners Club International, owned by Discover Financial Services, from issuing new cards due to similar violations. Global payments service providers like Mastercard, Visa and American Express have pushed against data localization, citing increased costs.
Though this development will not hit existing customers, business impact will be significant as banks will need to sign new commercial deals with rival networks such as Visa (V.N), a process that can take months and involve weeks of back-end technology integration. The RBI’s 2018 rules were adopted despite aggressive lobbying by U.S. firms seeking to dilute them. Mastercard has said it is “disappointed” with the decision and will work to resolve the concerns. The decision is a major setback for Mastercard, which counts India as a key market.
