Mastercard: India stops payment service provider from issuing cards

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image captionMastercard will be prohibited from issuing cards to customers in India from 22 July

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

The Reserve Bank of India has accused the company of violating data storage laws.

The bank said Mastercard had not complied with rules requiring foreign card networks to store data on Indian payments exclusively in India.

There has been no response from the global payments service provider.

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

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

The central 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 start-up PPRO quoted by AFP news agency.

In 2019, the firm 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.

media captionSameer Hashmi reports on the battle to stop bank card fraud in India

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