RBI lifts business restrictions imposed on Mastercard

The Reserve Bank of India (RBI) has lifted the restrictions on onboarding new domestic customers placed on Mastercard Asia/Pacific Pte Ltd.

“The restrictions imposed on on-boarding of new domestic customers, vide order dated July 14, 2021, have been lifted with immediate effect,” the RBI said, citing Mastercard Asia / Pacific Pte. Ltd.’s “satisfactory compliance” with the Reserve Bank of India’s (RBI) circular dated April 6, 2018 on Payment System Data Storage.

For non-compliance with RBI standards for data storage in India, Mastercard has been barred from onboarding new domestic users (debit, credit, or prepaid) onto its card network as of July 22, 2021. The RBI had given Mastercard almost three years to comply with the regulatory directives, but it was unable to do so.

The Reserve Bank of India (RBI) announced on April 6, 2018, that it has discovered that not all system providers in India stored payment data. According to the report, the payment environment in the country had grown significantly. Such systems were also heavily reliant on technology, necessitating the ongoing implementation of best-in-class safety and security measures, according to the RBI.

According to the central bank, system providers must ensure that all data linked to payment systems they administer is stored in an Indian-only system.

The Reserve Bank of India has mandated that data be stored only in India, with no copies — or mirroring — held in other nations. Payment companies that used to store and process Indian transactions outside of India claimed that their systems were centralised and that moving the data storage to India would cost them millions of dollars.

What irritated foreign participants was that domestic payment companies, especially e-commerce companies, were exerting pressure on the government to store data within India. Under the Payment and Settlement Systems (PSS) Act, 2007, Payment System Operators such as Mastercard, Visa, and the National Payment Corporation of India (NPCI) are licenced to run a card network in India.

According to RBI’s Press Release:

In view of the satisfactory compliance demonstrated by Mastercard Asia / Pacific Pte. Ltd. with the Reserve Bank of India (RBI) circular dated April 6, 2018 on Storage of Payment System Data, the restrictions imposed, vide order dated July 14, 2021, on on-boarding of new domestic customers have been lifted with immediate effect.

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