The Reserve Bank of India (RBI) on Wednesday barred Mastercard from onboarding new domestic customers. The ban will come into effect from July 22, and will be effective on debit, credit as well as prepaid cards offered by the company. Here's everything you want to know about the order:
Why did RBI restrict Mastercard?
Mastercard is a Payment System Operator authorised to operate a card network in the country under the Payment and Settlement Systems Act, 2007 (PSS Act).
Through a circular dated April 6, 2018, RBI had directed all system providers 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 was stored in a system only in India.
Besides, all system providers 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 specified timelines.
However, Mastercard Asia/ Pacific Pte Ltd (Mastercard) was found to be in violation of these guidelines. "Notwithstanding 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 central bank said.
What will happen to existing customers of Mastercard?
The central bank asked Mastercard to advise all card issuing banks and non-banks to conform to its directions. However, RBI clarified that "this order will not impact existing customers of Mastercard".
So, if you are already using a debit or credit card from Mastercard, you need not worry. The order is only for new customer additions and not for existing customers. The existing customers will be able to use all the services offered by the company as earlier without any changes.
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