Earlier this week, the Reserve Bank of India decided to bar Mastercard Asia/Pacific Pte. Ltd. customers from its network due to non-compliance with local data storage rules.
As Business Standard noted, this news caused shares of RBL – a private bank in the country – to decline on Thursday (July 15), and then recover when the lender announced it had “entered into an agreement with Visa to issue credit cards enabled on the Visa payment network.”
RBL has approximately three million credit card customers and is the fifth largest credit card issuer in India, with roughly 5 percent of the market share, Business Standard said. Before this agreement, RBL only issued cards on the Mastercard payments network.
“RBL Bank expects to start issuance of credit cards on the Visa payment network post the technology integration, which is expected to take eight to 10 weeks,” the bank said.
However, RBL expects its rate of issuing 100,000 new credit cards each month to be impacted until it gets clarification from regulators on issuing new cards on the Mastercard network, or until the technical integration with Visa is finished.
RBL said its action against Mastercard this week was taken in accordance with the powers vested in the central bank under the Payment and Settlement Systems Act. It barred Mastercard from bringing domestic debit card, credit card or prepaid card customers onto its network starting July 22.
“Notwithstanding the lapse of considerable time and adequate opportunities being given, the entity has been found to be non-compliant with the directions on Storage of Payment System Data. This order will not impact existing customers of Mastercard,” the central bank said in the press release.
This news followed RBL’s previous decision to bar American Express and Diners Club from onboarding new domestic clients onto their card networks, a decision that went into effect on May 1. As with Mastercard, RBL said these card companies were found to be in non-compliance with the data storage regulations.