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Mumbai, NFAPost: In a heavy blow to its expansion plans, Mastercard Asia/Pacific Pte Ltd is barred by the Reserve Bank of India (RBI) from onboarding new domestic customers on its network from July 22 over non-compliance with local data storage guidelines.

The global card player Mastercard which allowes the third entity also to be barred on these grounds after the RBI had in April told American Express and Diners Club International to not get new domestic customers.

The apex bank in a statement made it clear that Mastercard has been found to be non-compliant with the directions on storage of payment system data, notwithstanding the lapse of considerable time and adequate opportunities given.

RBI has clarified that the ban is only on adding new domestic customers to its network and that there will be no impact on the existing customers. It has also asked all banks and non-bank lenders working with Mastercard for issuance of debit, credit, or prepaid cards to adhere to the RBI regulations on storage of payment system data.

“The supervisory action has been taken in exercise of powers vested in the RBI under Section 17 of the Payment and Settlement Systems Act, 2007 (PSS Act),” the central bank said.

Mastercard is a payment system company, operating a card network in the country under the PSS Act. Along with Mastercard, Visa, and RuPay are the other big card issuers in the country.

Visa is the largest player in the space in India followed by Mastercard and RuPay, according to industry estimates. But Mastercard is seen as having a premium position in the industry. RuPay, which accounts for nearly 35 per cent of the cards market share, is seen as a disruptor, fast catching up with its global peers. While Visa and Mastercard are big players in the credit cards segment, RuPay has cornered a large chunk of the debit cards segment.

A banker said that while the restriction on Mastercard continues, a duopoly situation might arise. Also, the RBI action may hamper issuance of cards in the near term for private banks which have exclusive tie-ups with Mastercard for promoting spending. There could also be a small hit on other income as no incremental cards can be issued. Banks are taking stock of the situation and preparing responses.

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