India bans Mastercard from issuing new cards in data storage row

FILE PHOTO: A Mastercard logo is seen on a credit card in this picture illustration August 30, 2017. REUTERS/Thomas White/Illustration/File Photo

MUMBAI (Reuters) – The Reserve Bank of India (RBI) on Wednesday indefinitely barred Mastercard Inc from issuing new debit, credit or prepaid cards to domestic customers for violating data storage rules, dealing a blow to the U.S. company in a key market.

In a notification, the RBI said Mastercard had not complied with data storage rules from 2018 that require foreign card networks to store Indian payments data locally so the regulator can have “unfettered supervisory access”.

“Notwithstanding lapse of considerable time and adequate opportunities being given, the entity (Mastercard) has been found to be non-compliant with the directions,” the RBI said.

Mastercard did not immediately respond to a request for comment. The ban takes effect on July 22.

The RBI’s decision will not impact existing customers of Mastercard, and the company should advise all card issuing banks in India to comply with the order, the RBI added.

The move comes less than three months after India’s central bank barred American Express and Diners Club International, owned by Discover Financial Services, from issuing new cards due to similar violations.

The RBI directive in 2018 sparked an aggressive lobbying effort from U.S. companies who said the rules would increase their infrastructure costs and hit their global fraud detection platforms, but the central bank did not relent.

The order comes as companies such as Mastercard and Visa also face growing competition from domestic payments network Rupay, which has been promoted by Prime Minister Narendra Modi.

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