The Reserve Bank of India (RBI) has banned Mastercard Inc (NYSE:MA) to issue new debit, credit, and prepaid cards to customers, over allegations of breaching the country’s data storage rules.
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A Mandate From 2018
As of Thursday, the company won’t be able to take new clients for an undisclosed period, as the announcement did not specify how long the prohibition would last.
On Wednesday, the RBI released a statement declaring that the central bank “had been given considerable time and adequate opportunities” to Mastercard to comply with a mandate announced in 2018, as reported by CNN.
The order obliges all payment providers “to store data on Indian users and transactions only on locally based servers.” After issuing the mandate, companies had up to six months to follow suit.
In the statement, the RBI said that Mastercard should direct “all card-issuing banks ‘to conform’ to the new restrictions,” and assured that the measure did not cover existing Mastercard clients in the country.
Upon being required for comment by CNN on why the ban had arrived much later after the order’s issue, the RBI “didn’t immediately respond.” Mastercard also declined to disclose the number of people using its cards in India.
However, it emphasized that “there is no impact to our current operations in India,” and underlined that the company “is fully committed to our legal and regulatory obligations in the markets we operate in.”
Mastercard told CNN Business that for the last three years, it had worked shoulder to shoulder with the central bank to reach the data storage requirements.
“While we are disappointed with the stance taken … we will continue to work with them and provide any additional details needed to resolve their concerns,” the company said.
However, the Mastercard ban arrives just three months after the RBI imposed a similar sanction on American Express Company (NYSE:AXP) on the same grounds.
The company said back then that it had been “in regular dialogue” with the country’s regulators and “demonstrated our progress towards complying with the regulation.”
There is an ongoing crackdown on data privacy by global regulators, which in turn exerts pressure on how companies store their clients’ data. In June, China finalized its Data Cybersecurity Law to bolster its data security regulation.