Tag: mastercard ban

Mastercard ban fallout: YES Bank partners with Visa for credit cards

Banking & Finance

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Private sector lender YES Bank on Monday announced that it has partnered with Visa to offer credit cards to its customers on the payment platform.

The private sector lender is also in the process of completing technology integration with NPCI and plans to issue Rupay branded credit cards in due course, it said in a statement on Monday.

YES Bank earlier had an exclusive tie up with Mastercard. However, its credit card issuances had been impacted after the Reserve Bank of India barred Mastercard from onboarding new customers on its domestic card network.

“With the partnership, the bank commences issuance of select credit card variants, consumer as well as commercial, on Visa’s payment network – the transition has been achieved within a record time of less than 60 days, ensuring ease for customers across segments,” YES Bank said on the tie-up with Visa.

Nine card variants

The suite consists of nine credit card variants on the Visa platform that service all segments – consumer cards, business cards, and corporate cards.

Also read: RBL Bank credit cards go live on Visa

Rajanish Prabhu, Head – Credit Cards and Merchant Acquisition, YES Bank, said, “Our partnership with Visa adds a new dimension to the bank’s sustained efforts in transforming and elevating end-to-end credit journeys for our customers. “

YES Bank is the second lender after RBL Bank to have announced a partnership with Visa in recent days.

Sujai Raina, Head – Business Development, India, Visa, said, “We are delighted to partner with YES BANK to launch an expansive suite of Visa solutions for their customers. At a time when consumers are turning to credit offerings for daily as well as discretionary spends, we are now extending an already strong relationship with the bank – across debit, digital and acceptance solutions – to a wide range of credit offerings.”

YES Bank, which has been ambitious about onboarding new customers for credit cards, has 9,99,495 credit cards outstanding by July-end.

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US trade official called India’s Mastercard ban ‘draconian’, BFSI News, ET BFSI

Banking & Finance

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A senior US trade official privately criticised India’s July decision to ban Mastercard Inc from issuing new cards, calling it a “draconian” move that caused “panic”, according to US government emails seen by Reuters.

The documents show frustration within the US government after India’s central bank banned new card issuance by American Express and Diners Club International in April, then took similar action against Mastercard in July.

The Reserve Bank of India accuses the companies of breaking local data-storage rules. The bans do not affect existing customers.

The ban on Mastercard – a top payment network in India alongside Visa – triggered a flurry of emails between U.S. officials in Washington and India as they discussed next steps with Mastercard, including approaching the RBI, the government emails show.

“We’ve started hearing from stakeholders about some pretty draconian measures that the RBI has taken over the past couple days,” Brendan A. Lynch, the deputy assistant US trade representative for South and Central Asia, wrote on July 16, two days after the Mastercard announcement.

The RBI said that the restrictions have been imposed as in spite of 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.

“It sounds like some others (Amex, Diners) may have been impacted by similar actions recently,” wrote Lynch, asking his colleagues in India to get in touch with their central bank contacts “to see what’s going on”.

Lynch, spokespeople for the Office of the U.S. Trade Representative and the U.S. Embassy in New Delhi did not respond to requests for comment. The U.S. government has not publicly commented on the Mastercard ban.

The RBI did not immediately respond.

A Mastercard spokesman told Reuters, “We’ve had very constructive engagements with the Indian and U.S. governments over the past few weeks and appreciate the support of both.” This includes discussions with the RBI, and Mastercard has “made good progress” as it looks to resolve the situation quickly, he said.

“PANIC”, “FULL COURT PRESS”
Mastercard counts India as a key growth market. In 2019 it said it was “bullish on India”, a country where it has made major investment bets and built research and technology centres.

The Mastercard ban rattled the company and upset India’s financial sector as Indian partner banks fear a hit to their income as they struggle to swiftly partner with new networks to offer cards.

The RBI acted against Mastercard because it was “found to be non-compliant” with the 2018 rules despite the “lapse of considerable time and adequate opportunities”.

The rules, requiring foreign card networks to store Indian payments data locally for “unfettered supervisory access”, were implemented after failed lobbying efforts of U.S. firms also soured trade ties between New Delhi and Washington.

Mastercard has said it was “disappointed” with the decision. The company has told Reuters it had submitted an additional audit report to the RBI before the ban took effect on July 22.

The US government emails show there was hope things could be sorted out before that.

In one, Lynch told colleagues the understanding was that “the RBI has info they need and are hopeful that they will respond appropriately.” But as the ban approached, “if the RBI doesn’t change course, I’m sure the panic will resume,” he wrote.

Days later, he wrote that Mastercard was continuing “to put on the full court press” in Washington.

While RBL Bank signed up with Visa as recently as last week, a Yes Bank spokesperson said the bank is evaluating migrating to other platforms. Both banks said they expect no disruption to their existing customers due to the RBI action.

Indian regulations require all foreign payment operators to store card and customer related data in servers physically located in the country.



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RBL Bank | Mastercard ban: RBL Bank restarts credit card issuances with rival Visa, BFSI News, ET BFSI

Banking & Finance

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Two months after getting hit by the regulatory ban on Mastercard, private sector lender RBL Bank on Wednesday restarted credit card issuances on rival Visa‘s payment network.

The Reserve Bank of India had banned Mastercard from issuing any new cards on July 14 this year for not complying with data localisation requirements. The move had hit a slew of lenders, including RBL Bank, which was fully dependent on the American payment company for its credit card business.

RBL Bank said it signed up with Visa on July 14 itself, and the technology integration was achieved in record time to restart new issuances.

Its head for retail business thanked Visa and technology partner Fiserv, and exuded confidence of meeting its target of issuing 12-14 lakh credit cards in FY22.

Visa’s head of business development for India Sujai Raina said the company aims to enable digital payments and help customers avail credit offerings from issuers with ease.

Credit cards contribute 37.5 per cent of the retail book for the lender, which has a 5 per cent market share in the segment. Its credit card book had grown 17 per cent to Rs 12,039 crore as of June, and had 30.69 lakh cards outstanding as of July.

The bank in its guidance had said that by mid-September, it will restart issuances and hoped to do 1 lakh cards a month on average.

The RBL Bank scrip was trading 2.42 per cent up at Rs 179.60 a piece on the BSE at 1252 hrs, as against gains of 0.59 per cent on the benchmark.



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

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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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