The recent amendments by the Reserve Bank of India (RBI) to the guidelines on debit and credit card issuances will boost customers’ data privacy. According to the directives, co-branded partners will have to display the data to the customer without storing them. They won’t have access to customer data as it will be transmitted in the encrypted form. Earlier, there were no clear restrictions for co-branded partners regarding storage of customer data.
“Data will be transmitted in the encrypted form and can be seen only by users. Data will be displayed through APIs (application programming interface) on the co-branded platform without permitting them to store the same,” Avinash Godkhind, MD & CEO of Zaggle, told FE.
The RBI is gearing up for an era where the size of the credit card business will significantly increase, and the number of issuers as well as the variety of products within cards will expand. The regulator wants to provide the maximum clarity about the rules of the game, he said.
The central bank on Thursday released amendments to the master direction – credit card and debit card – issuance and conduct directions 2022. Experts say the RBI has struck the right balance between convenience and data security. Consumers will have the convenience to access their information on any platform without worrying about data privacy.
According to the data localisation rule issued in 2018, companies were required to store their data locally. However, there were concerns that some co-branding partners might be sharing data with their parent companies headquartered abroad. To address this loophole, the RBI issued new rules last year, making it mandatory for co-branding partners to store data locally.
Experts feel the amendments have brought much-needed clarity. “These amendments have made it very clear what is allowed and what is not. There is no room for speculation now,” said a senior official of a fintech company.
“The recent release is more of a clarification on the old guideline… In terms of data security, it ensures that the information strictly remains with intended parties. It is a step that clearly demarcates the duties of the parties involved and gives better clarity to customers,” said Ashish Goyal, co-founder and chief financial officer, Fibe.
Banks are now required to monitor the end use of business cards. With growing usage, business cards were being used for purposes other than intended ones such as payment for vendors and merchants. The RBI has told issuers to make sure that such practices do not occur, as it wants to prevent any possible money laundering.
Consumers are now allowed to choose their billing cycles. As per new rules, banks cannot charge late payment fees on the full amount if any part payment is made.