India’s Reserve Bank has banned Mastercard from issuing new debit or credit cards in the country. The ban, which doesn’t impact current Mastercard holders, came because of data storage regulation violations, of which American Express and Discover also fell victim.
India Bans Mastercard
Mastercard is facing a ban on the issuance of new credit cards in India. The Reserve Bank of India (RBI) due to violations of data storing rules. The violations, which require foreign card payment networks to store Indian payments data in India, were also breached by American Express and Diners Club approximately three months ago. The ban will not impact customers who already hold a Mastercard debit or credit card in India.
The change in data storing rules occurred in 2019, causing intense lobbying efforts from Amex, Visa, Mastercard, and Discover – all U.S.-based companies. The companies argued the new rules would increase their infrastructure costs and stretch their fraud protection services thin.
However, the major difference in the cases of Amex and Diners Club (Discover) from that of Mastercard is the stake Mastercard holds in the Indian marketplace. Mastercard partners with many of India’s leading banks to issue credit and debit cards, with the company announcing $1 billion in investment over six years just two years ago.
Mastercard Faces Intense Domestic Pressure from RuPay
The new ban opens the door for Visa to score new partnerships and increase their stake in the Indian marketplace. U.S. payment networks have faced stiff competition from domestic payment platforms in recent years, with RuPay and Unified Payment Interface (UPI).
RuPay, the largest competitor to the major card issuers, is an Indian multinational financial services and payment service system, accepted at over 42.4 million POS locations and 190 million ATM locations worldwide.
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