Tag: American Express

RBI lifts biz sanctions imposed on Diners Club, BFSI News, ET BFSI

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The Reserve Bank of India on Tuesday lifted the ban imposed on Diners Club International in April from onboarding new customers for flouting data storage norms. The banking regulator noted that the ban was being lifted after Diners was found to have complied with the stipulated rules.

“In view of the satisfactory compliance demonstrated by Diners Club International Ltd. with the Reserve Bank of India (RBI) circular dated April 6, 2018 on Storage of Payment System Data, the restrictions imposed, vide order dated April 23, 2021, on on-boarding of fresh domestic customers have been lifted with immediate effect,” the regulator said in a statement.

In FY22, India’s banking regulator had barred three US-based card networks namely MasterCard, American Express and Diners Club International from doing new card business in India as these companies have been flagged as non-compliant with local data storage rules by RBI.

While New York-headquartered American Express and Illinois-based Diners Club were prohibited by the central bank on April 23 from issuing new cards on their respective networks. On July 14, Mastercard – one of the world’s leading card operators – was also barred from doing new card business in India owing to similar non-compliance.

As per RBI’s data localisation rules introduced first in April of 2018, payment operators in India must store data in a server physically present in India. Additionally, these entities are required to submit System Audit Report (SAR) conducted by a CERT-In empanelled auditor.

The Indian central bank had tightened data storage norms for PSOs in India through a notice issued to chief executives of all such licensed companies in India.

As per the rules introduced in March, all PSOs from FY22 were mandated to submit detailed “compliance certificates” to the central bank twice a year signed by the respective chief executives or managing director, confirming adherence to all RBI regulations around security and storage of payment data.

These requirements are over and above the ones mandated by the central bank in April of 2018 where it asked all PSOs to submit board-approved annual System Audit Report (SAR) by CERT-empaneled auditors.

These companies were also asked to submit a one-time compliance report with data localization norms which mandate the data relating to payments in India will be stored in a server physically present in the country, by December of 2018.

RBI had asked these certificates to be submitted on April 30th and October 31st of every year.



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Ezetap, BFSI News, ET BFSI

Personal Finance

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Customers are increasingly preferring to pay through EMIs while buying high-value consumer items, as affordability has become a key factor in the post-pandemic scenario, payments solution provider Ezetap said on Thursday. Buying ability of consumers across the country has been significantly reduced due to the pandemic. They are either avoiding a single big payment or entirely skipping to buy any new item, Ezetap said.

This has impacted sales across brands and created a vast need for affordable solutions for customers across different sectors.

Ezetap has recorded a steep increase of 220 per cent in the transactional volume of equated monthly instalments (EMI) in July 2021, compared to February 2020. EMI volume as part of total transactions has increased to 18 per cent in the mobile and consumer durables segment, compared to 9 per cent in the pre-pandemic period of March 2020, it said.

“This indicates a growing inclination of consumers towards affordability solutions, which help increase their purchasing power. This also indicates that EMI or affordability presents a massive opportunity for brands to grow their sales across diverse product segments,” it added.

Delhi led metro cities with an increase of 258 per cent in total EMI volume followed by Bengaluru, clocking a growth of 206 per cent.

There has been a significant increase in the adoption of EMI transactions in non-metro cities with a combined contribution of 59 per cent in the total EMI volumes. Ahmedabad and Pune registered growth figures of 230 per cent and 210 per cent, respectively.

“This shows that affordability solutions play a positive role in impacting sales…This may be partially attributed to the fact that a large portion of the working population have moved back to their hometowns due to work from home models, and have contributed to EMI sales in their respective hometowns” it added.

According to Ezetap, a surge in debit card EMIs is one of the main reasons behind the steep increase in such transactions and it has increased significantly with nearly 25 per cent contribution in the total EMI volumes.

Through a tie-up with several banks, Ezetap offers instant EMIs via credit and debit card. The average ticket size of EMI transactions recorded by Ezetap has increased from Rs 18,000 in February 2020, to Rs 32,000 in July 2021.

In a move to expand the benefits of EMIs, Ezetap has also tied up with ZestMoney to provide NBFC EMIs.

Another factor for large-scale uptake of EMIs is no-cost EMIs and vouchers available to customers by various brands. Nearly 50 per cent of Ezetap EMI transaction volume can be attributed to no-cost brand EMIs, it said.

On the mobile and consumer durable space, there is at least one card offer being rolled out by various brands to drive more sales. Ezetap has also partnered with Xiaomi to provide EMIs to customers.

Customers are avoiding bulk payments and preferring affordable payment options to reduce the monetary burden, and some non-metro cities have growth of over 200 per cent in EMI transactions, Byas Nambisan, CEO, Ezetap, said.

“We have been able to reduce the transaction time by nearly 80 per cent and eliminate the manual errors with EMI integrated into the merchant’s billing POS. We will continue our efforts to provide the retail businesses with robust and integrated Buy Now Pay Later solutions, like EMIs, to improve the purchasing power of their end customers,” he said.

Ezetap has forged tie-ups with banks such as Axis Bank, HDFC Bank, Citibank, State Bank of India, American Express, Yes Bank and ICICI Bank. PTI KPM KPM BAL BAL



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RBI partially lifts ban on HDFC Bank, allows it to sell new credit cards, BFSI News, ET BFSI

Banking & Finance

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Eight months after barring the country’s largest private sector lender HDFC Bank from selling new credit cards, the Reserve Bank of India (RBI) has lifted the ban.

However, the ban on launching new technology initiatives remains.

In December last year, the RBI had come out with an unprecedented action implementing both the bans, after repeated instances of technological outages at the lender, which is the market leader in the credit cards segment.

Rivals ICICI Bank and SBI Cards seized the opportunity to narrow the gap with HDFC Bank.

The bank’s existing users were not impacted by the ban and it had 1.48 crore credit card customers as of June.

The impact

On July 17, the bank’s Chief Executive and Managing Director Sashidhar Jagdishan had said it has complied with 85 per cent of the RBI’s requirements on the improvements desired, and the ball is now in the regulator’s court to re-allow the bank.

Earlier, its technology and credit card vertical had said the time off the market has been utilised to re-draw processes and the teams are raring to go.

Jagdishan had said a technology audit is also over and the RBI will now be “independently” taking a view on when to lift the penal actions taken against the bank.

“We have given a milestone to the regulator in terms of what are the things we are doing on technology, complying with their advisories and directives.

The progress

“We have covered a significant portion as we speak. Almost 85 per cent of what we had to do has been covered,” Jagdsihan, who has been with the lender for over two decades and worked as the ‘change agent’ in the years leading to his elevation, said.

He added that the ball is in the regulator’s court. “As they deem fit, as they see that we are on the right track, I am sure at some point of time, they will lift the embargo.”

Acknowledging that the bank has lost market share in the credit card segment due to the ban, Jagdsihan said tech outages are a global phenomenon but it is the time taken to recover from a setback where the bank erred, leading to the “rap on the knuckles” from the regulator.

The action against HDFC Bank has been followed with a ban on card companies Mastercard and American Express from selling any new cards because of a failure to adhere to data localisation rules.

Also read : HDFC Bank episode shows that digital banking is not easy



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Actions against HDFC Bank, Mastercard driven by keenness to ensure compliance of norms: Das

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A keenness to ensure compliance to regulatory guidelines has led the RBI to initiate strong actions against entities like HDFC Bank, Mastercard and American Express, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Friday.

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Mastercard submits new audit to India after ban over data handling, BFSI News, ET BFSI

Banking & Finance

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Mastercard has submitted a new audit report to India’s central bank, it told Reuters, as it seeks to overturn a ban on card issuance linked to concerns over the U.S. giant’s handling of data processed abroad.

The Reserve Bank of India (RBI) on July 14 sent panic-waves through Indian banking partners by announcing a ban, effective from July 22, to prevent the U.S. giant from issuing new cards. It cited non-compliance with 2018 rules that required it to store payments data only in India.

The RBI imposed the ban after deciding a “system audit report” submitted by Mastercard’s auditor Deloitte in April was unsatisfactory, three sources familiar with its decision-making said, asking not to be named because of the sensitivity of the issue. Two of the sources said the RBI was reviewing the new report.

In a statement to Reuters, Mastercard said Deloitte performed a “supplemental audit” and a new report was submitted on July 20 to the RBI, six days after the ban was announced.

“We look forward to continuing our conversations with the RBI and reinforcing how seriously we take our obligations. We are hopeful that this latest filing provides the assurances required to address their concerns,” it said.

Deloitte declined to comment, citing confidentiality obligations. The RBI did not respond to a request for comment.

The sources said the RBI was concerned Deloitte’s audit did not clearly state how long Mastercard took to purge Indians’ card data that is processed abroad before being stored locally.

India’s 2018 rules do not restrict where the data is processed, but for “unfettered supervisory access”, the RBI mandates that within a day the data – including transaction details and amount – should be stored domestically.

Mastercard in 2018 said it had started storing data at a facility in India’s western city of Pune to comply. But it still processes a part of each Indian transaction through data centres abroad, and later transfers and stores that data in Pune, one of the sources said.

The RBI has given no details beyond a seven-line statement announcing the ban. The details of RBI’s concern with Deloitte’s submissions have not previously been reported.

American Express, whose Indian presence is much smaller than that of Mastercard and Visa, has also has been banned from issuing new cards since April for violating the 2018 rules.

A fourth person with direct knowledge of the matter said the RBI had given Mastercard multiple extensions to submit clarifications and RBI only issued the ban when Mastercard asked for more time when an extension to July 9 lapsed.

Mastercard did not comment on the extension and the situation in Pune.



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Foreign banks lose card market share, BFSI News, ET BFSI

Banking & Finance

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Foreign banks have seen their share of credit cards come down by a third in the last three years. In terms of value of transactions, their share has halved as that of private and public sector banks have grown.

According to data released by the RBI, foreign banks had 57 lakh credit cards outstanding as of March 2018. At that time, there were 3.8 crore credit cards in India, which gave the multinationals a market share of 15%. However, despite losing market share, the foreign banks had significant clout because of the higher value of transactions by their customers who spent more than the average cardholder. In 2018, the foreign banks had monthly card spends of Rs 10,380 crore — a 23.4% share.

Fast forward to March 2021, when the total market expanded to 6.2 crore cards while the number of cards issued by foreign banks stood at 66 lakhs, reflecting a market share of nearly 11%. It is not just in the number of cards that the multinationals have been losing ground. In terms of value of transactions too, foreign banks have a market share of 11.8% in the Rs 72,372-crore monthly volume.

While private banks have consolidated their market share in the card space, increasing their share from 63% to 66%, public sector banks have grown from 21.6% to 23.2% in three years. State Bank of India accounts for almost 80% of all public sector banks. Overall, SBI has 19% of the credit card market, which is still behind the 24% share of HDFC Bank.In global banks, four dominate the credit card space — Citi, Amex, StanChart and HSBC. These MNC banks have also played a pioneering role in the card business in India and they dominated the market in the ’90s. Citi’s decision to exit its retail business in India could further reduce share of foreign banks, should the portfolio be taken by a local player. Additionally, American Express faces a freeze on on-boarding new customers due to data-localisation norms even as more private banks are stepping in.

In 2018, American Express had 3% of the credit card market in terms of number of customers. But it accounted for 10% of all spending by credit card customers in India. In 2021, their share of cards shrunk to 2.5%, while the share of spending declined to 4%. Citibank, which had a 7% share of cards and 9% share of spend, saw these fall to 4% and 6%, respectively. HSBC has held ground better than others with a market share of 1.4% as of March 2021 (1.5% in ’18) and retaining its 1% share of total spend.



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BharatPe acquires PAYBACK India – The Hindu BusinessLine

Banking & Finance

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BharatPe on Thursday announced the acquisition of PAYBACK India from American Express and ICICI Investments Strategic Fund.

It did not disclose the transaction value.

Also read: BharatPe signs strategic partnership with ICC

“This is the first-ever acquisition by BharatPe and will make PAYBACK India, the country’s largest multi-brand loyalty program with over 10 crore members, a wholly-owned subsidiary of BharatPe,” it said in a statement.

The acquisition of PAYBACK India is in line with BharatPe’s strategy to build a robust and engaged network of over two crore small merchants by 2023, it further said.

The acquisition will help BharatPe enhance its value proposition for merchant partners and also help it build a lucrative set of offerings for end customers that will enhance footfalls at merchants and accelerate the growth of their businesses.

PAYBACK India will continue operating under its current name and there will be no impact on its existing customer and partner relationships. It will also continue to roll out initiatives to offer value for all customers.

All PAYBACK India employees will now become part of the BharatPe group.

Suhail Sameer and Gautam Kaushik, Group Presidents, BharatPe, along with Sumeet Singh, General Counsel, BharatPe, have joined the Board of PAYBACK India, the company said in the statement.

Further, the role of the senior leadership team at PAYBACK India will be expanded to include the loyalty program for the over 60 lakh merchants of BharatPe.

“With the acquisition of PAYBACK India, we will be able to add a whole new dimension to our merchant value proposition. In addition to the range of payment and credit products which BharatPe offers to help merchants scale their business, we will also be able to drive more consumers to their stores,” said Ashneer Grover, Co-Founder and CEO, BharatPe.

Also read: BharatPe raises ₹50 crore in debt from Northern Arc Capital

“It was our top priority to ensure that for the members of the successful PAYBACK India program there would be no changes and that the great customer experience would also be maintained: Users can collect points while shopping offline and online and benefit from exclusive offers in the usual way, now at even more merchants with BharatPe,” said Markus Knorr, CFO, PAYBACK Global.

Launched in 2010, PAYBACK India has a network of more than 100 offline and online partners. Customers can earn and redeem points on every transaction at its partner merchant outlets

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RBI raises heat on foreign banks over data storage norms violations, BFSI News, ET BFSI

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After social media firms, it’s time for foreign banks to strictly comply with rules in India.

The Reserve Bank of India (RBI) has pulled up several multinational banks operating in the country for not providing a board-approved system reporting certifying compliance with its data-localisation norms.

Last month, the central bank had barred American Express Bank and Diners Club from on-boarding new customers citing violation of data storage norms.

In a recent communication, the RBI said that a majority of banks are yet to submit system audit reports certifying compliance to storage norms even after three years since the issuance of the circular.

Many banks have said that the audit norms did not apply to them and this was not acceptable. The central bank had asked banks to submit their compliance along with a plan of action on or before May 15, 2021.

The RBI norms

According to the RBI’s norms, data on payments has to be stored in systems located “only in India” and data processed abroad has to be brought back to the country within 24 hours.

The central bank said Payment System Operators (PSO) can process transactions outside India, but “the data should be deleted from the systems abroad and brought back to India not later than the one business day or 24 hours from payment processing, whichever is earlier”.

“The complete end-to-end transaction details should be part of the data,” the RBI had said.

What foreign banks say?

Several foreign banks have been unable to issue an audit report stating that all personal and non-personal transaction data which has been sent overseas for processing has been permanently deleted.

Many banks had responded to the RBI’s directive and said that much of their processing was centralised and it was not feasible to restructure global operations and create a separate hub in India. The RBI then clarified that while data can be stored only locally, it can be sent intraday for processing but should be deleted from offshore servers in 24 hours.

Banks are required to provide a system audit report certifying compliance with the RBI rules. The audit has to be conducted by auditors empanelled by the Indian Computer Emergency Response Team (CERT-In, in the ministry of electronics.)

American Express, Diners Club

In April, the RBI has restricted American Express Banking Corp and Diners Club International from on-boarding new domestic customers onto their card networks from May 1 for violating data storage norms.

American Express Banking Corp and Diners Club International Ltd are Payment System Operators authorised to operate card networks in the country under the Payment and Settlement Systems Act, 2007 (PSS Act).

The RBI has imposed the restrictions on American Express Banking Corp and Diners Club International by an order dated April 23, 2021.

“These entities have been found non-compliant with the directions on Storage of Payment System Data,” the RBI said.

The supervisory action, it added, has been taken in the exercise of powers vested in RBI under the PSS Act.



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How to choose riders in a guaranteed insurance plan

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With increased awareness about insurance products and prevailing low bank deposits rates, many insurers have launched assured return products to catch the attention of investors. These types of plans offer guaranteed regular income i.e. a pre-defined percentage of sum assured (SA) is paid out as per a schedule.

In addition to offering life cover (up to policy term) and savings, such policies offer multiple riders i.e. additional benefits to the policyholder for an extra cost, to enhance the benefits of the policyholders. While all the riders at first glance appear to benefit you, it is important you choose the ones that fit your requirements.

Options galore

Almost all guaranteed return insurance policies, including those of Bajaj Allianz Life, Aditya Birla Sun Life, HDFC Life and Future Generali Life, come with rider options. Life insurance riders are contingent additional benefits over a primary/base policy. They come into play in case of a specific eventuality. Riders offer financial cover (rider SA) over and above basic sum assured in the life insurance policy.

Some of the common riders include accidental death benefit, where the policy (rider as well as base policy) pays rider/maturity benefit to the nominee. There is accidental permanent total/partial disability benefit where policyholder receives a lump sum payment (from the rider policy) in case of any specified disability.

Some insurers offer critical illness benefit rider where if the policyholder is diagnosed with any of the listed critical illnesses, the rider policy will pay the benefit and terminate. Even with the occurrence of the said event, the life cover remains intact which means you remain eligible for the death benefit on the life insurance plan.

In case of a waiver of premium rider, all future premiums for the term cover are waived if the policyholder is unable to pay because of permanent disability due to an accident or on being diagnosed with a critical/terminal illness.

A few insurers offer other riders as well. For instance, Bajaj Allianz Life offers family income benefit rider where 1 per cent of SA is paid monthly to the nominee/policyholder upon death or permanent disability or the first occurrence of one of the listed critical illnesses. Similarly, Aditya Birla Sun Life insurance offers, among other riders, surgical care benefit and hospital care benefit riders as well.

Factors to keep in mind

Do note the savings plans offered by life insurers generally cost more than a pure protection plan. Also, you may have to shell out more in terms of premium if you opt for riders. Consider Bajaj Allianz’s Flexi Income Goal plan which provides guaranteed income. For a 30-year old opting for an SA of ₹5.04 lakh and a guaranteed monthly income of ₹3,500 over a policy term of 17 years (premium payment term is 5 years), the total outgo works out to ₹1,23,892 (excluding tax). Now if a rider is added to this, say, a critical illness benefit rider, then the total premium cost works to ₹1,25,585 (excluding tax and discounts).

Before signing up for any rider, keep in mind two crucial things.

First, check whether the rider you want is available with that particular policy. For instance, in case of Future Generali Lifetime Partner Plan, there are no riders available but its Triple Plan Advantage plan comes with accidental benefit rider. Similarly, HDFC Life’s Sanchay Par Advantage offers two riders accidental disability rider and critical illness plus rider.

Second, assess whether you really need rider(s) with a savings product. According to Bikash Choudhary, Appointed Actuary & Chief Risk Officer, Future Generali India Life, “While all the riders play an important role in enhancing protection for the policyholders, the selection of riders depends on the need of the individual in terms of finance, lifestyle etc. For example, waiver of premium rider comes in handy in case of an insurance plan bought for a child. If the parents are not around, the rider helps in continuation of the policy until maturity to get full benefits, thereby protecting the child’s future financially.”

It is generally recommended to keep insurance and savings separate, instead of combining the two. This is because you may neither get sufficient life cover nor good returns from the product when you mix them. But certain investors such as high networth individuals, who have very low risk appetite, can consider such products. While these products do offer multiple riders or options, it may not make sense to sign for all of the riders available. So, make an intelligent choice to save on premium.

Check whether the rider is available with particular policy

Find out if you really need rider with a savings product

Savings plans cost more than term plans

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Make new arrangements for recurring credit, debit card transactions as new norms kick in from April 1

Banking & Finance

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Starting April 1, customers will have to make alternative arrangements for recurring transactions for utilities and bill payments such as registering the biller on internet or mobile banking.

This is because most banks and payment companies have been unable to meet RBI norms to process e-mandate on cards for recurring transactions.

However, UPI and Rupay AutoPay facilities are unlikely to be disrupted. Sources said that most banks are live on it but it is unclear as to how many merchants are live on it.

Most large banks and payment players have already been informing customers that they would have to make alternative arrangements for auto debit through debit and credit cards.

Apart from payments for utilities like phone and electricity bills, even recurring payments to service providers such as Amazon Prime and Netflix will have to be made directly.

According to bankers, while they have made arrangements to comply with RBI norms, many merchants are yet to adhere to them.

“We are currently building a solution in adherence to the regulatory requirements. Therefore, effective April 1, 2021 any standing instruction for recurring transactions on your Card account will not be approved by American Express,” American Express said in a communication to customers, adding that to avoid any disruption in delivery of goods and services, starting April 1, 2021 customers should make payments directly to the service providers for bills as and when they become due.

Visa declined to comment on the issue when approached by BusinessLine.

“..as per regulatory guidelines, recurring merchant transactions based on Standing Instructions on your ICICI Bank Cards will be disabled effective April 1, 2021. To continue making payments against your regular utility bills, kindly register your biller through iMobile Pay or Internet Banking. For other standing instruction transactions, you may re-register or initiate transactions at regular intervals,” ICICI Bank said in a similar message to customers.

Recently, the Internet And Mobile Association of India (IAMAI) had also warned that millions of e-mandates set up by customers could fail from April 1, 2021.

The RBI had issued two circulars (August 2019 and December 2021) to banks, ‘non-bank prepaid payment instrument issuers’, and ‘authorised card payment networks’ for processing of e-mandates. The deadline to comply with it is March 31, 2021.

Under the new norms, banks will be required to inform customers in advance about recurring payment due and it would be carried following nod from the customer. For recurring payments above ₹5,000, banks are required to send a one-time password to the customer as per the new guidelines.

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