Update: Mastercard ban was lifted on 22 June 2022
Following earlier restrictions on HDFC Bank, American Express and Diners Club, the Reserve Bank of India (RBI) imposed a ban on Mastercard from onboarding new customers. This action carries broad implications because it affects many banks and spans credit, debit and prepaid card issuance. Below is a clear summary of the situation and its likely consequences.
- What’s the ban? Mastercard was barred from acquiring new customers effective 22 July 2021.
- Why? Non-compliance with RBI’s data storage requirements.
- Who’s impacted? All banks issuing Mastercard-branded credit, debit and prepaid cards.
Although the formal start date was 22 July, some banks implemented the restriction immediately to allow time to process existing applications. Existing cardholders on Mastercard products were not affected by the ban.
Table of Contents
- Who’s severely affected?
- Who benefits from the ban?
- When will the ban be lifted?
- Final thoughts
Who’s severely affected?
Banks that rely exclusively or predominantly on Mastercard for card issuance faced the sharpest impact. Examples include:
- RBL Bank
- Yes Bank
RBL and Yes Bank were particularly exposed because many of their credit and debit products were issued solely on the Mastercard network. That meant both card acquisition and retail deposit acquisition tied to those debit cards were disrupted.
Axis Bank was also affected, since some of its popular credit products were launched exclusively on Mastercard and could not be issued while the ban remained in place.
Both RBL and Yes Bank began working with alternate card networks to resume issuance, and industry estimates suggested it could take around three months to transition and go live on alternative platforms.
On a product level, several notable credit cards that were exclusive to Mastercard became temporarily unavailable for new applicants. A few prominent examples were:
- Axis Flipkart credit card — a major product for Axis Bank that saw significant disruption
- RBL Zomato credit card — a key co-branded card affected by the ban
- Bank of Baroda ETERNA credit card — a premium product limited by the restriction
- Axis Magnus credit card — a premium travel-focused card that could not be issued during the ban
Other Mastercard-exclusive cards were also impacted, but the above list highlights several high-profile products that could not be issued until the restriction was lifted or banks migrated to other networks.
Who benefits from the ban?
At the payment-network level, Visa emerged as the primary beneficiary because the bans affecting Amex, Diners Club and Mastercard effectively reduced competition and increased issuance opportunities for Visa.
The government-backed RuPay network also stood to gain market share, and banks began evaluating or accelerating migrations to RuPay for certain product segments. Consequently, some credit cards on the RuPay platform were expected to appear sooner.
From a bank perspective, institutions with strong Visa relationships, especially those that compete heavily in the mass-market entry-level segment, stood to gain. ICICI Bank, for example, was well-positioned because many of its high-volume entry-level cards run on Visa.
At the product level, the ICICI Amazon Pay credit card was positioned to benefit significantly. With several major competitors constrained by the ban, ICICI’s ability to continue issuing a popular entry-level product allowed it to scale issuance rapidly. Reports indicated ICICI had issued over two million Amazon Pay cards and could reach three million more quickly given the reduced competition.
When will the ban be lifted?
Estimates at the time suggested the ban might last roughly three to six months. However, because this particular restriction affected the payments ecosystem broadly, some industry watchers believed it was unlikely to be prolonged, and a resolution within about three months was considered plausible.
Ultimately, the duration depended on how quickly Mastercard and the RBI could align on the required data storage and compliance measures.
Final thoughts
The payments industry in India faced sustained regulatory pressure since late 2020, creating uncertainty for banks, card networks and customers. The Mastercard restriction highlighted the ripple effects that compliance issues can have across issuing banks and card products.
Mastercard issued statements saying it had taken steps to comply with the RBI’s onshore data storage directive and expressed disappointment with the RBI’s stance while committing to cooperate further to resolve concerns. In their words:
Since the issuance of the RBI directive requiring on-soil storage of domestic payment transaction data in 2018, we have provided consistent updates and reports regarding our activities and compliance with the required stipulations. While we are disappointed with the stance taken by the RBI in their communication dated July 14, we will continue to work with them to provide any additional details required to resolve their concerns.
The hope across the industry was that these issues would be resolved in the coming months and that payments issuance would return to normalcy before year-end. Consumers and issuers alike looked forward to stable operations and fewer disruptions in the months ahead.