RBI restricts Mastercard from acquiring new customers in India; here's why

The Reserve Bank of India (RBI) has barred Mastercard from onboarding new domestic customers under all three categories of credit, debit as well as prepaid from July 22, 2021. The decision has been taken for non-compliance with "directions on Storage of Payment System Data," the RBI said in a statement.

"Notwithstanding the lapse of considerable time and adequate opportunities being given, the entity has been found to be non-compliant with the directions on Storage of Payment System Data."

The RBI assured that the order will not impact Mastercard's existing customers.

The action has been taken under RBI's section 17 of the Payment and Settlement Systems Act, 2007 (PSS Act). The central bank also ordered Mastercard to extend these directions to all card-issuing banks and non-banks. 

Why has RBI imposed restrictions on Mastercard?

According to RBI, in April 2018, the regulatory body released a circular on Storage of Payment System Data stating "all System Providers were directed to ensure that within a period of six months the entire data (full end-to-end transaction details/information collected/carried/processed as part of the message/payment instruction) relating to payment systems operated by them is stored in a system 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 empanelled auditor within the timelines specified therein," the RBI added.

The financial services company failed to comply with these directions.

Others on which restrictions have been imposed

With this, Mastercard has become the third Card Network on which action has been taken for non-compliance with RBI's directions on Storage of Payment System Data.

In April, RBI imposed restrictions on American Express Banking Corp and Diners Club for acquiring new customers in India for non-compliance with data storage norms.

(With ANI inputs)