Fri, 22 Oct 2021

Storage of data causes India to ban new MasterCards

Robert Besser
22 Sep 2021, 17:45 GMT+10

WASHINGTON D.C.: In U.S. government emails, as reported by Reuters, India's decision in July to ban MasterCard from issuing new cards was privately criticized by Brendan A. Lynch, deputy assistant U.S. trade representative for South and Central Asia, who called it a "draconian" measure that created panic.

The frustration within the U.S. government after the Reserve Bank of India earlier banned American Express and Diners Club International from issuing new cards in April, followed by MasterCard in July, was highlighted by the emails.

The Reserve Bank's bans on the U.S. credit card companies, which do not affect existing customers, is due to their allegedly violating local data-storage rules.

The MasterCard ban triggered a flurry of emails between U.S. officials in Washington and India who discussed the next steps with MasterCard, the government emails show.

On 16th July, two days after the MasterCard ban, Lynch wrote, "We have started hearing from stakeholders about some pretty draconian measures that the Reserve Bank has taken over the past couple of days."

"It sounds like others (American Express and Diners Club) may have been impacted by similar actions recently," he added.

Lynch did not respond to requests for comment, and the U.S. government has not publicly talked about the MasterCard ban. The Reserve Bank has also made no comments.

In response, a MasterCard spokesperson told Reuters, "We have had very constructive engagements with the Indian and U.S. governments over the past few weeks and appreciate the support of both."

The company considers India a key growth market and has invested heavily in the country, and has built research and technology centers.

The ban also angered the Indian financial sector, as local banks are now struggling to partner with new networks to offer cards and are concerned about losses in income.

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