The Reserve Bank
of India barred Mastercard from onboarding new customers in India on July 14. This
is after the RBI imposed restrictions on two other card companies, American
Express and Diners Club, from taking in new customers earlier. The restrictions
have been imposed over data storage issues in accordance with stipulations of
India’s central bank.

Why the
restrictions?

The RBI imposed
restrictions on Mastercard, disallowing it from onboarding new customers from
July 22, because the company did not comply with the RBI’s guidelines for
storage of data in India. The RBI said that it had given Mastercard nearly
three years to comply with the guidelines. American Express and Diners Club
have also been barred from onboarding new customers for the same reason.  

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Will existing users be affected?

No, existing customers using credit and
debit cards with these companies, will be able to continue using those. However,
banks and non-banking finance companies that were planning to use these payment
networks will not be able to enrol customers until the RBI lifts its restrictions.

What are the RBI’s guidelines on data
storage?

According to the RBI’s circular on
Storage of Payment System Data issued on April 6, 2018, all card system
providers have been directed to store payment data in a system only in India.
This includes complete end-to-end transaction details and information collected
or processed as part of payment instructions.

Why have these firms not complied?

Payment
firms like Visa and Mastercard currently store and process Indian transactions
outside the country. Companies say that moving the systems to India will cost
them millions. Further, the firms believe that complying to the Indian central
bank’s rules will lead to similar demands from other countries.

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What are the payment providers remaining?

The restrictions on the three companies currently leaves only Visa Inc and National Payments Corporation of India’s RuPay.