Why did RBI ban Mastercard?
A thread.
A thread.
It’s official - Global cards giant Mastercard has been barred by the RBI from onboarding new clients in India. And there’s a solid reason behind it.
Well, this comes due to the company’s alleged non-compliance with the RBI on data localization norms.
Of late, countries like Russia & China, and now India - are insisting on this requirement to secure their citizen’s data within their own soil.
Of late, countries like Russia & China, and now India - are insisting on this requirement to secure their citizen’s data within their own soil.
Now, since the RBI being the watchdog has a major responsibility to supervise the financial system, it has insisted that these companies store the banking and transactional data of Indian citizens within the country.
The reasons behind this could be many - from checking money laundering to ensuring national security. And with banks, it is more important now than ever as more and more are Indians switching to the online banking ecosystem.
So you might ask - what could be the consequences of such seemingly harsh restrictions?
Well, banks that solely depend on Mastercard for credit cards - RBL Bank, Yes Bank, and the likes, stand to be hit temporarily, as it will take 10 weeks to switch to other payment networks.
Well, banks that solely depend on Mastercard for credit cards - RBL Bank, Yes Bank, and the likes, stand to be hit temporarily, as it will take 10 weeks to switch to other payment networks.
However, besides this, existing MasterCard users stay unaffected since the ban is only on onboarding new clients.
And anyone looking to apply for a new card isn’t very particular about whether the payment network is Visa, or Mastercard, or Rupay, so new clients won’t miss it much either.
And while the clampdown is hard on Mastercard, it sure is a blessing for Visa and our homegrown RuPay. See, banks don’t have a lot of choices now.
So they go for either Visa, which is already the biggest player in the market, or Rupay, which will now have a chance to strengthen its foothold in the debit card space.
But here’s another catch - many global websites do not accept RuPay yet. So it looks like we have a clear winner here.
What do you think about this decision & its consequences? Let us know.
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Make sure you check out our latest endeavor- @joinditto
What do you think about this decision & its consequences? Let us know.
*********
Make sure you check out our latest endeavor- @joinditto
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