The Reserve Bank of India (RBI) on Wednesday barred Mastercard Inc from acquiring new customers starting July 22. The payments operator has been barred from adding domestic customers cross three categories of cards – debit, credit as well as prepaid.
The action by the central bank has been prompted by Mastercard’s failure to be in compliance with RBI’s directions on data storage. RBI observed Mastercard had failed to comply with the rules despite the company having been given considerable time and several chances to do so. The central bank, however, clarified in a statement, the order will not impact existing Mastercard customers.
The move comes less than three months after the RBI barred American Express and Diners Club International, on April 23, from issuing new cards due to similar violations.
The rules, announced in 2018, require payment systems providers to store all data generated by them on their servers only in India. In its circular on April 6, 2018, the RBI had also directed the system providers to submit a board-approved system audit report conducted by auditors of CERT (computer emergency response team). Mastercard is one of the top three card issuers in India, along with Visa and Rupay.
The Indian government has been concerned that large technology players, who are collecting data on millions of consumers, will transfer the data overseas.
The central bank has been empowered to supervise data storage under Section 17 of the Payment and Settlement Systems Act, 2007 (PSS Act). Mastercard shall advise all card-issuing banks and non-banks to conform to these directions, the RBI said.
