The recent ban on issue of new Master Card, by Reserve Bank of India is surely going to impact the plastic card business in India. This ban is effective from 22nd July 2021 and the existing users will not be affected, but banks may issue new cards of different payment network processors. Now after this ban, the duopoly enjoyed by VISA and Masters comes to an end and is going to be replaced by Visa and Rupay (Managed by National Payments Corporation of India- NPCI) in coming days.
The Data storage and privacy is an important ingredient behind this decision as Reserve Bank of India, had asked MasterCard along with other foreign payment network providers like Diners and American Express (New issues banned from 22nd May 2021) to comply with the rules. The RBI rules for payment network needs to be mentioned to understand this decision in a better way.
The rules are-
The above rules were not complied with by the payment players and the result is banning of new issues.
The benefit of this decision is surely to be taken by Rupay, and Government of India is continuously enhancing the capacity of Rupay network. Nationalised banks still have a major share in banking business are issuing Rupay cards ( Debit/Credit) to increase its presence and capture the shares of Visa and Masters. And this decision will act as another boon for Rupay after the opening of Jan-Dhan accounts (The account holders were issued Rupay cards).
It is also to be noted that VISA is also facing pressure of compliance and for securing its present position in the Indian card market. At present VISA holds 45% of share in the market and would like to gain from the loss of Master Card market (approximately 33%) along with tough competition from Rupay.
