India Bans Mastercard: New Customer Restrictions

RBI Indefinitely Bans Mastercard Card Issuance in India

The Reserve Bank of India (RBI) has issued an indefinite prohibition against Mastercard issuing new debit, credit, or prepaid cards to customers within the Indian market. This action stems from a failure to adhere to the country’s regulations concerning local data storage.

Details of the Restriction

According to the central bank of South Asia, the restrictions will become effective on July 22nd. The RBI stated on Wednesday that Mastercard has been consistently noncompliant with the directives regarding the storage of payment system data, despite being given ample time and opportunities to rectify the situation.

Existing Mastercard customers will not be affected by this new order. The RBI has instructed Mastercard to ensure all card-issuing banks and non-bank financial institutions comply with these directives.

Previous Actions and Data Storage Rules

This is not an isolated incident. The RBI has previously imposed penalties on other companies for failing to comply with the local data storage rules.

These rules, initially introduced in 2018, required all payments companies to store Indian transaction data on servers located within the country, with a six-month compliance timeframe.

Recent Similar Restrictions

In April, similar restrictions were placed on American Express and Diners Club, also due to violations of the same data storage regulations.

Industry Concerns and Lobbying Efforts

Visa, Mastercard, and other payment firms, along with the U.S. government, have previously appealed to New Delhi to reconsider these rules. Concerns have been raised that the regulations are designed to grant the regulator unrestricted access to supervisory data.

Lobbying efforts from Visa, Mastercard, and American Express have focused on either substantially modifying the rules or completely abolishing them.