New Delhi (Sputnik) — A step which is likely to have serious implications for American firms providing direct digital payment facilities in India, the Reserve Bank of India (RBI) has laid down a six months timeframe for them to set up local data centers to store transaction related information of Indians. The country's financial regulator RBI has said that the step was necessary for ensuring the safety and security of payment systems.
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"It is observed that at present only certain payment system operators and their outsourcing partners store the payment system data either partly or completely in the country. In order to have unfettered access to all payment data for supervisory purposes, it has been decided that all payment system operators will ensure that data related to payment systems operated by them are stored only inside the country within a period of 6 months," RBI said in a statement.
In recent times, the payments ecosystem in India has expanded considerably, with the emergence of new payment platforms and operators. The value of card transactions has jumped several times over the last year and it crossed to over $53 billion per month from $38 billion prior to November 2016, when the government scrapped old bank notes leading to a cash crunch.
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"Their continuous monitoring and surveillance are essential to reduce the risks from data breaches while maintaining a healthy pace of growth in digital payments," RBI said in a statement.
Visa and Mastercard have been already losing market share in India; thanks to India's own Unified Payments Interface (UPI) which allows mobile apps run by retailers, airlines and other firms to take payment directly from bank accounts. RBI data shows that the transactions through UPIs have reached almost half the value of debit and credit cards swiped at stores in February this year.