RBI Bans Mastercard.

 What has happened?

The RBI has barred Mastercard Asia Pacific from onboarding new credit, debit and prepaid card customers with effect from July 22 as it failed to comply with data storage norms.

Mastercard is the third card network to be barred by RBI this year, after American Express and Diners Club were similarly prohibited  from onboarding new customers in April.

This leaves just Visa and Rupay as the only card networks allowed to take in new customers.

But Why This Step By RBI?

The data storage rule enforced in 2018 mandates that - "Payments system providers store the entire payment data in systems located only in India, except for processing cross-border payments."

Data sent abroad for processing should be deleted abroad  within the prescribed timeline and stored only in India.

Mastercard's Response.

"While we are disappointed with the stance taken by RBI in their communication dated July 14, we will continue to work with them to provide any additional details required to resolve their concerns. We remain committed to working with our customers and partners  in advancing on the government's Digital India Vision," said Mastercard.

Impact.

The RBI order will not affect existing customers of Mastercard. Also, a majority of banks are not expected to be affected as they often have relations with multiple networks and thus could continue to issue debit and credit cards using Visa and Rupay networks.