Mastercard, a major card issuing company, is the third one to have been barred by the Reserve Bank of India (RBI) from acquiring new customers after American Express Banking Corp and Diners Club International over data storage issues. The RBI clarified that its supervisory action will not impact the services of the existing customers of Mastercard in the country.
However, a Reuters analysis of online card listings of 11 domestic and foreign banks in India showed Mastercard accounted for about a third of roughly 100 debit cards on offer, and more than 75 credit card variants used its network.
RBL Bank, which currently issues credit cards on the Mastercard network only, said it has entered into an agreement with Visa Worldwide on Wednesday to issue credit cards enabled on the Visa payment network
Though existing customers will not face any kind of difficulties, the business impact will be significant as banks need to sign new commercial deals with rival networks such as Visa, a process that can take months and involve weeks of back-end technology integration.
Experts have estimated that the switch to Visa could take as long as five months. And with American Express and Mastercard prohibited, Visa gets an unprecedented advantage in negotiations in a credit card market it already dominates.
In terms of RBI’s circular on Storage of Payment System Data on April 6, 2018, all system providers were directed to ensure that within a period of six months the entire data relating to payment systems is stored only in India.
They were also required to report compliance to RBI and submit a board-approved System Audit Report conducted by a CERT-In empaneled auditor within specified timelines.
Meanwhile, RBL Bank also said that its credit card issuance rate will be impacted post the barring of Mastercard.
