Mastercard business has received a major boost following the decision by Indian authorities to lift a nearly one year ban that has shut the payment giant out of one of the largest markets in the world.
Lifting the business restrictions means that Mastercard can now add new customers in the South Asian market. The central bank said on Thursday that it has demonstrated “satisfactory compliance” with the local data storage rules.
“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,” the RBI said in a statement on Thursday.
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Below, TechCrunch reported on a series of moves last year that saw the Reserve Bank of India indefinitely barred Mastercard, American Express and Diners Club from issuing new debit, credit or prepaid cards to customers over noncompliance with local data storage rules (PDF). The business restrictions on American Express and Diners Club remain in place in the country, though they are permitted to continue to serve their existing customer base.
Unveiled in 2018, the local data-storage rules require payments firms to store all Indian transaction data within servers in the country. Visa, Mastercard and several other firms, as well as the U.S. government, previously requested New Delhi to reconsider its rules, which they argued were designed to allow the regulator “unfettered supervisory access.”
Mastercard, which prior to the ban commanded roughly 33% market share in India, has identified the world’s second largest market as a key growth region and has invested over $2 billion in the country over the past decade.
“We welcome and are grateful for today’s decision by the Reserve Bank of India (RBI), enabling us to resume onboarding of new domestic customers (debit, credit and prepaid) onto our card network in the country with immediate effect. As we have in our engagement with the RBI, we reaffirm our commitment to support the digital needs of India, its people and its businesses. We are glad we have met this milestone and will continue to ensure ongoing delivery against the goals and regulatory requirements that have been established,” a Mastercard spokesperson said in a statement.
“India is an important market for us, both in terms of the innovation created here and the value we deliver to our customers and partners. We take great pride in being able to contribute to the government’s vision of a Digital India and will continue to invest in the country’s future with the same passion and dedication as we always have.”
The resumption of Mastercard’s business in India will provide a boost to the local banks and fintechs that for the last year have only been able to offer customers debit and credit cards powered by Visa and Rupay, a homegrown card network that is promoted by the National Payments Corporation of India, a special body of RBI.
The business restriction on the global cards giants took many banks by surprise last year. RBL Bank, for instance, scrambled to transition to Visa and took weeks to complete the process.