Thursday, 28 October 2021

Mastercard: India stops issuing new cards

Mastercard: India stops issuing new cards

India's central bank (RBI)has banned Mastercard stops issuing new debit and credit cards in India to Indian customers.

The RBI has accused the company of breaking the data storage act.

The bank said Mastercard had not following rules requiring foreign card networks to store data on Indian payments details in India only.

There is no response from the global payment service provider.

In India, from 22 July, Mastercard will stop issuing debit, credit, or prepaid cards.

Mastercard India stops issuing new cards 1getty image

Read More: Privacy Policy

The Reserve Bank's decision will not affect existing Mastercard users.

The Reserve Bank said the payments service provider had violated a 2018 order directing payments data to keep in India. These possibly permit regulator "unrestricted supervisory permission" to payment features.

The RBI said in a notification.

"Notwithstanding lapse of considerable time and enough opportunity were given, Mastercard has been found to be non-compliant with the directions of Storage Payment System Data," 

Last year, Mastercard accounted for 33% of all card payments in India, according to London-based payments start-up PPRO quoted by AFP news agency.

In 2019, the firm announced an investment of a billion dollars over the next five years as part of expansion plans in India.

Later this year, Diners Club and American Express stopped issuing new cards due to similar violations.

US-based payment service providers have lobbied aggressively against the 2018 directive, saying such a move would increase their business costs in India.

But India's central bank has not relented.

Among significant credit card players, SBI Card is the least dependent on Mastercard as only 10 percent of cards are on such a platform. TATA Card, a co-brand credit card of SBI Cards, SBI Card is the second largest card issuer in the country, with over 11 million cards. SBI Card issue around 1 lakh cards every month.

In India, there are more than 62 million credit cards as of May 2021. Sources said, over 50 percent of the market share is captured by Visa, while Mastercard has about 30-35 percent market share. Credit Cards are primarily providing Mastercard and Visa. However, public sector banks, which are not a significant player in the credit card market – also give homegrown Rupay cards to the National Payments Corporation of India (NPCI).

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