India stops Mastercard issuing cards over data storage row

India’s central bank has barred Mastercard indefinitely from issuing new debit or credit cards to domestic customers.

The Reserve Bank of India is accusing the US company of violating data storage laws.

It said Mastercard has not complied with rules requiring foreign card networks to store data relating to Indian payments exclusively in India.

Mastercard will be prohibited from issuing debit, credit or prepaid cards to customers in India from July 22.

The Reserve Bank’s decision will not have any impact on Mastercard’s existing customers.

The bank said the payments service provider had violated a 2018 order directing payments data to be stored in India. This would allow the regulator “unfettered supervisory access” to payment details.

“Notwithstanding the lapse of considerable time and adequate opportunities being given, the entity [Mastercard] has been found to be non-compliant with the directions of Storage Payment System Data,” the RBI said in a notification.

Last year, Mastercard accounted for 33% of all card payments in India, according to London-based payments watchdog PPRO.

In 2019, Mastercard announced an investment of a billion dollars over the next five years as part of its expansion plans in India.

Earlier this year, American Express and Diners Club were blocked from issuing new cards due to similar violations.

US-based payment service providers have lobbied aggressively against the 2018 directive, saying such a move would increase their costs of doing business in India.

But India’s central bank has not relented.

Mastercard has said it is “disappointed” with the RBI’s decision and that it has provided regular updates on its compliance with the rules since 2018.

“We will continue to work with them to provide any additional details required to resolve their concerns,” it said in a statement.