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Will your Debit and Credit Card be Valid India after RBI's Ban on Mastercard? Read Here

In 2018, RBI directed that all service providers must store and process data related to payment systems, exclusively in India

In 2018, RBI directed that all service providers must store and process data related to payment systems, exclusively in India

Reserve Bank of India has prohibited Mastercard from on-boarding new domestic customers onto its network. Will it affect existing debit and credit card users?

The Reserve Bank of India has imposed restrictions on Mastercard Asia or Pacific Pte. Ltd. from on-boarding new domestic customers onto its network. The ban will come into effect from July 22, the regulator said in a statement. The Reserve Bank of India said that Mastercard had not complied with rules requiring foreign card networks to store payments data in India. “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. Notwithstanding lapse of considerable time and adequate opportunities being given, the entity has been found to be non-compliant with the directions on Storage of Payment System Data," the regulator mentioned in a notification.

RBI Ban on Mastercard: What it Means for Banks?

The Reserve Bank of India has prohibited Mastercard from issuing debit card, credit card or prepaid cards to new customers, starting from July 22. Several private sector lender including HDFC Bank, Yes Bank, ICICI Bank, RBL Bank have tie-ups Mastercard for debit and credit cards. So banks will not be able to issue new cards on the Mastercard network anymore. “Mastercard shall advise all card issuing banks and non-banks to conform to these directions," it added.

Following the order, RBL Bank said in a regulatory filing, “We await further information from Mastercard on RBI’s supervisory action. RBL Bank currently issues credit cards on the Mastercard network only."

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Will Mastercard Debit and Credit Cards Be Valid in India?

Mastercard is a payment system operator authorised to operate a card network in the country under the Payment and Settlement Act System Act. In 2019, Mastercard accounted for over 30 per cent of all card payments in India, according to the data released by PPRO, London-based payments, mentioned AFP.

If you use Mastercard debit or credit card, you need not worry. That the latest move by the RBI will not affect those who have been using Mastercard debit or credit cards in the country. “This order will not impact existing customers of Mastercard," the banking regulator earlier mentioned. So the customers can use 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 took stringent measure against a foregin network for not complying norms. Earlier, RBI barred American Express Banking Corp. and Diners Club International Ltd. from onboarding new domestic customers onto their card networks from May 1.

“These entities have been found non-compliant with the directions on storage of payment system data. This order will not impact existing customers,” it said.

RBI Payment Data Storage Rule in India: 

In 2018, the Reserve Bank of India directed that all service providers must store and process data related to payment systems, exclusively in India. “All system providers shall ensure that the entire data relating to payment systems operated by them are stored in a system only in India," the regulator said in a notification. Tech giants like Paytm, WhatsApp and Google used to store data on a cloud database outside India, prior to RBI’s announcement. “This data should include the full end-to-end transaction details or information collected or carried or processed as part of the message or payment instruction," the bank said. The companies are allowed to store details of transactions outside India in the foreign countries. They were to report compliance and also submit an audit report.

RBI gave six months time to ensure new payment data storage norms.  The companies were asked to report compliance and also submit an audit report within the timeline. Even after two years, several foreign companies are yet to follow with RBI data localisation guidelines.

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first published:July 15, 2021, 14:13 IST