Mastercard banned by RBI from issuing new card
- RBI has banned global payments giant Mastercard from adding new customers starting next week
- RBI found Mastercard to be in violation of its April 2018 circular that directed all payments data be stored exclusively in India
- The norms will allow the regulator ""unfettered supervisory access"" to transaction details in India.
Background:
- Most banks in India provide four types of debit and credit cards:
- Visa,
- Mastercard,
- Maestro (a part of the Mastercard enterprise), and
- RuPay.
- Of these, only RuPay is Indian, and until its launch in 2012, the sector was dominated by foreign players.
Mastercard ban:
- Mastercard is an American multinational financial services corporation headquartered in Purchase, New York.
- Its principal business is to process payments between the banks of merchants and the card-issuing banks or credit unions of the purchasers who use the ""Mastercard"" brand debit, credit and prepaid cards to make purchases.
- RBI found Mastercard to be in violation of its April 2018 circular that directed all payments data be stored exclusively in India
- This directive was issued with a 6-month deadline for compliance.
- The move is a big setback for Mastercard, which had earmarked $1 billion for investment in India over the next 5 years in 2019.
- RuPay, which was already a dominant player with a market share of around 60% (pdf) in November 2020 is expected to be the biggest gainer of the move.
About RuPay:
- Introduced by National Payment Corporation of India (NPCI),
- It is an indigenous domestic debit card accepted at all ATMs (for cash withdrawal) and at most of the PoS machines
Benefits of RuPay Card
- Lower cost and affordability
- Customized product offering for Indians
- Protection of information related to Indian consumers: Transaction and customer data related to RuPay card transactions will reside in India.
- Inter-operability between payment channels and products