RBI restrains Mastercard from onboarding new India customers

The Reserve Bank of India (RBI) on Wednesday said it has imposed restrictions on the local arm of global payments network giant Mastercard, Asia/Pacific from on-boarding new domestic customers. 

Mastercard has been barred from onboarding India based customers for its debit, credit and prepaid card offerings onto its card network from July 22. 

“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 central bank said in a statement.

The order, RBI said, will not impact existing customers of Mastercard.  

Accordingly, Mastercard will have to advise all its card issuing banks and non-banks to conform to the new order. 

Mastercard, in a statement to TechCircle, emphasised that it is committed to its legal and regulatory obligations in markets that it operates in.  

“Since the issuance of the RBI directive requiring on-soil storage of domestic payment transaction data in 2018, we have provided consistent updates and reports regarding our activities and compliance with the required stipulations. While we are disappointed with the stance taken by the RBI in their communication dated July 14, we will continue to work with them to provide any additional details required to resolve their concerns,” the company said.  

The supervisory action, RBI added, has been taken in exercise of powers vested in itself under Section 17 of the Payment and Settlement Systems Act, 2007 (PSS Act). 

Mastercard in India is a payment system operator authorised to operate a card network under the same act. 

As per an RBI circular on Storage of Payment System Data dated April 6, 2018, all system providers were directed to ensure that within a period of six months the entire data relating to payment systems operated by them is stored in a system only in India. 

The data includes full end-to-end transaction details, information collected, carried, processed as part of the message, payment instruction.  

System providers such as Mastercard and Visa were also required to report compliance to RBI and submit a board-approved system audit report conducted by an auditor, empanelled by the Indian government’s CERT-In, within set timelines.