India's central bank, the Reserve Bank of India, on Wednesday said that American Mastercard was forbidden to issue new cards from 22 July since it had not complied with local data-storage rules.
"Notwithstanding the lapse of considerable time and adequate opportunities being given, [Mastercard] has been found to be non-compliant with the directions on Storage of Payment System Data," the official statement said.
This order will not affect existing Mastercard customers, the Bank's statement added.
This is the second time India’s central bank has penalised American firms for non-compliance with local data-storage rules, which were unveiled in 2018.
Mastercard is a Payment System Operator authorised to operate card networks. Under data-storage rules, payments firms are required to store all Indian transaction data within servers in the country. This data includes end-to-end transaction details, information collected, carried and processed as part of the message.
Visa, Mastercard, and other firms had asked India's federal government to reconsider this rule. By April this year, the RBI had imposed restrictions on American Express and Diners Club International Ltd from accepting new domestic customers, again because they had not complied with these new local rules.
American firms claim that storing data at a local server will increase their infrastructure costs and impinge on their global fraud detection platforms.