Master, one of the global leaders in debit/credit and pre-paid cards, has been stopped from issuing new cards by the Reserve Bank of India. This action is because it has not complied with the new data storage laws that came into effect in India in 2018.
This law requires that all foreign card networks should be storing their data within India. The rule came into effect in 2018 but the company has still not complied with the law as yet, RBI said.
“Notwithstanding (the) lapse of considerable time and adequate opportunities being given, the entity (Mastercard) is non-compliant with the directions of Storage Payment System Data,” the RBI said in a notification. The RBI has also said that this would not affect the existing cards in any manner at all. Earlier this year, American Express and Diners Club were also stopped from issuing new cards by the RBI for the same reason.
Mastercard accounts for 33% of the debit, credit, and prepaid card payments in India and the fact that it has now been stopped from issuing new cards should be considered as a big blow for the company’s new business in India. The storage of all the data in India would give the regulator total and full access to all the payments data of all the users. Mastercard and other US-based companies have already raised concerns over this as they believe that storing all this data would lead to huge costs and would make their business unviable in the long term but the regulator has been adamant with bringing in these changes to stop the possibility of the data falling into the wrong hands or other countries having the data of its citizens.
Mastercard has aggressive growth plans within India and in 2019, it had committed a billion dollars to push forward with these plans but that does not seem to have enticed the regulators or the authorities so far and it increasingly looks as though the company may not have any choice but to comply with the data storage law.
India is one of the fastest-growing markets for the card and cardless payments and the industry is expected to grow exponentially in the coming years, spurred on by the pandemic and the push in India to move towards a cashless society. This is likely to force Mastercard and other card issuers to comply with the new restrictions sooner rather than later though it is not clear where the Indian users would turn to if the company chooses not to do so as Visa and Mastercard basically monopolize the card market.