The latest move is a part of RBI’s localisation mandate for payments data that came into effect in 2018 and requires that such data be mandatorily stored in India.
The Reserve Bank of India in a statement today said that it has barred Mastercard from onboarding new domestic customers in India onto its card network – debit, credit, or prepaid cards – with effect from July 22. The statement, however, notes that existing Mastercard users will not be impacted by the restrictions.
Earlier this year, the RBI had barred American Express and Diners Club from onboarding new customers due to non-compliance with its data localisation guidelines. In December 2019, the RBI imposed sanctions on HDFC Bank and barred the bank from onboarding any new credit card customers. Mastercard along with payments network Visa dominate global cards payment and, in India, the credit cards market.
In April 2018, a circular was issued by the RBI to payments systems and scheduled commercial banks directing them to
- Store their entire data relating to payment systems operated by them in a system only in India.
- Report compliance of the same to the RBI in six months
- Submit a System Audit Report (SAR) done by a CERT-in empanelled auditor to the RBI by December 2018.
“This data should include the full end-to-end transaction details / information collected / carried / processed as part of the message / payment instruction. For the foreign leg of the transaction, if any, the data can also be stored in the foreign country, if required,” said the circular.
The RBI said that Mastercard had failed to be in compliance with the directions on Storage of Payment System Data, “notwithstanding the lapse of considerable time and adequate opportunities being given.”
In June 2019, the RBI had issued further clarifications on the guidelines.
- Data processed outside: The RBI also clarified that while there is no bar on overseas processing of strictly domestic transactions, the data should be brought back to India within one business day or 24 hours of payment processing and be stored locally here. The regulator also said that should companies need access to data for payment processing activities, they can access it, at any time.
- Data to be mandatorily stored in India: This data includes i) customer data such as name, mobile number, email, Aadhaar number, PAN number, etc. as applicable; ii) payment sensitive data – customer and beneficiary account details; iii) payment credentials – OTP, PIN, passwords, etc. and iv) transaction data – originating & destination system information, transaction reference, timestamp, amount, etc. The RBI said that data stored in India should include end-to-end transaction details and information pertaining to payment or settlement transactions.
- These norms are applicable to transactions made through system participants, service providers, intermediaries, payment gateways, third-party vendors, and other entities in the payments ecosystem apart from all the payment system providers authorised by the RBI.
Subsequently, the RBI issued relaxations on the guidelines for large foreign firms to comply with the data localisation rules. During the implementation of the guidelines, several banks had expressed concerns about the RBI’s data storage requirements and processing-related guidelines.
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