Reserve Bank of India Mastercard Asia or Pacific Pte is banned. Ltd. by adding new domestic customers to its network. The regulator said in a statement that the ban would be effective from July 22. The Reserve Bank of India said that MasterCard did not comply with regulations requiring foreign card networks to store payment data in India. “The Reserve Bank of India (RBI) has today banned Mastercard Asia/Pacific Pte. (MasterCard) from new domestic customers (debit, credit or prepaid) on its card network with effect from July 22, 2021. The unit has been found non-compliant, despite considerable time lapse and adequate opportunity being given. With instructions on storage of payment system data,” the regulator mentioned in a notification.
RBI ban on Mastercard: What does it mean for banks?
Reserve Bank of India has stopped the issuance of MasterCard Debit CardCredit card or prepaid card for new customers from July 22. Several private sector lenders including HDFC Bank, Yes Bank, ICICI Bank, RBL Bank have tie-up with MasterCard for debit and credit cards. Therefore, banks will no longer be able to issue new cards on the MasterCard network. “Mastercard will advise all card issuing banks and non-banks to comply with these instructions,” it said.
Following the order, RBL Bank in a regulatory filing said, “We await further information from Mastercard on RBI’s supervisory action. RBL Bank currently issues credit cards only on the MasterCard network.”
Will Mastercard Debit and Credit cards be valid in India?
Mastercard is a payment system operator authorized to operate a card network in the country under the Payment and Settlement System Act. In 2019, Mastercard accounted for over 30 per cent of all card payments in India, according to data released by London-based payments PPRO, citing AFP.
If you use a MasterCard debit or credit card, you don’t need to worry. RBI’s latest move will not affect those who are using Mastercard debit or credit cards in the country. “This order will not affect existing customers of Mastercard,” the banking regulator had previously noted. Hence customers can access all the services on their MasterCard Debit and Credit cards without any changes.
This is not the first time
This is not the first time that the Indian banking regulator has taken stringent measures against foreign networks for not complying with norms. Earlier, the RBI had barred American Express Banking Corp and Diners Club International Ltd from adding new domestic customers on their card networks with effect from May 1.
“These entities have been found not to comply with the instructions for storage of payment system data. This order will not affect the existing customers,” it said.
RBI Payment Data Collection Rules in India:
In 2018, the Reserve Bank of India directed that all service providers should store and process data exclusively related to payment systems in India. “All system providers shall ensure that entire data relating to payment systems operated by them is stored in one system only in India,” the regulator said in a notification. Tech giants like Paytm, WhatsApp and Google used to store data on cloud databases. Outside India, before the RBI announcement. “This data should include complete end-to-end transaction details or information collected or carried or processed as part of a message or payment instruction,” the bank said. Companies abroad are allowed to store details of transactions outside India. They were to report compliance and also submit an audit report.
RBI gave six months to ensure the new payment data storage norms. The companies were asked to report compliance and submit an audit report within the time limit. Even after two years, many foreign companies are yet to comply with the RBI data localization guidelines.
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