5 changes RBI’s MasterCard ban will bring in India

By Leandra Monteiro

In light of Reserve Bank of India’s (RBI) ban, US-based Mastercard will not be issuing any new debit and credit cards from July 22 in India. The financial giant has been barred by the central bank for failing to comply with data storage rules.

Amit Das, Co-founder of Think360 – a parent company of Algo360 shared his expertise on how the ban will affect credit card ecosystem, IT priorities at Bank and other areas that will be impacted by this step of RBI. He said, “RBI’s decision is an interesting one – from a data localization and partnerships perspective. One must not forget the kind of strong stands the regulator has been taking – for instance, HDFC was barred from issuing cards unless they fix the technical observations made.”

Here are 5 changes he believes will be brought about by the ban:

1. The ban is a great opportunity for Visa, which has been engaging heavily with start-ups in the last 18-24 months, to move these sourcing pipes in their favour. Also, FinTechs like YAP have taken this opportunity to show how differentiated their agility is. In just 24-48 hours they’ve managed to switchover completely to Visa pipes.
2. Some of the banks that have a significant dependence on Mastercard (Yes Bank, RBL, Bajaj Finserv, Indusind, etc), may get affected adversely. The switch-over to non-Mastercard networks might take 3-4 months, and the economics may change.
3. Many of these card relationships, especially for larger banks, have complex economic models. Those are difficult to move overnight. More importantly, for some of the strategic product partnerships, where the rewards and marketing funding is coming from the payment gateway as well – will get impacted significantly.
4. Another likely associated impact is going to be, reduced onboarding (especially on credit cards) for the next 3 months or so.
5. HOWEVER, the most important unknown here is whether Mastercard is going to be able to comply with data localization laws, or will they gradually lose their market position to RuPay\ Visa. At this point, the clear beneficiary of this is going to be Visa, since Rupay has lower international acceptance.