Mastercard to stop issuing new debit, credit cards from tomorrow after RBI order. All you need to know
The RBI, however, clarified that its supervisory action will not impact the services of the existing customers of Mastercard in the country
PremiumUS-based Mastercard will not be allowed to issue new debit, credit cards from tomorrow, 22 July, after Reserve Bank of India (RBI) earlier banned indefinitely barred the company's cards for its failure to comply with data storage norms.
Mastercard, a major card issuing entity in the country, is the third company to have been barred by RBI from acquiring new customers after American Express Banking Corp and Diners Club International over data storage issue.
"The Reserve Bank of India (RBI) has today imposed restrictions on Mastercard Asia/Pacific Pte. Ltd. (Mastercard) from on-boarding new domestic customers (debit, credit or prepaid) onto its card network from July 22, 2021," the central bank said in a statement.
The RBI, moreover, clarified that its supervisory action will not impact the services of the existing customers of Mastercard in the country.
However, a Reuters analysis of online card listings of 11 domestic and foreign banks in India showed Mastercard accounted for about a third of roughly 100 debit cards on offer, and more than 75 credit card variants used its network.
Though existing customers will not be hit, business impact will be significant as banks need to sign new commercial deals with rival networks such as Visa, a process that can take months and involve weeks of back-end technology integration, five payment and banking executives said.
One banking executive said the switch to Visa could take as long as five months. And with American Express and Mastercard prohibited, Visa gets an unprecedented advantage in negotiations in a credit card market it already dominates.
Mastercard is a payment system operator authorised to operate a card network in the country under the Payment and Settlement Systems Act, 2007 (PSS Act).
In terms of RBI's circular on Storage of Payment System Data on April 6, 2018, all system providers were directed to ensure that within a period of six months the entire data relating to payment systems is stored only in India.
They were also required to report compliance to RBI and submit a board-approved System Audit Report conducted by a CERT-In empanelled auditor within specified timelines.
Meanwhile, RBL Bank earlier said its credit card issuance rate will be impacted post the Reserve Bank barring Mastercard Asia Pacific from onboarding new credit, debit and prepaid card customers with effect from July 22 as it failed to comply with data storage norms.
RBL Bank, which currently issues credit cards on the Mastercard network only, said it has entered into an agreement with Visa Worldwide on Wednesday to issue credit cards enabled on the Visa payment network.
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