The Reserve Bank of India (RBI) has imposed restrictions on Amex and Diners Club from on-boarding new domestic customers onto their card networks from 1 May, 2021.

According to RBI, Amex and Discover were found to be non-compliant with the directions on Storage of Payment System Data. The order does not impact existing customers. American Express and Diners Club are Payment System Operators authorised to operate Card Networks in India. The relevant legislation is the Payment and Settlement Systems Act, 2007. The supervisory action has been taken in exercise of powers vested in RBI under the Act.

In terms of RBI circular on Storage of Payment System Data dated April 6, 2018, all Payment System Providers are directed to ensure that within a period of six months the entire data (full end-to-end transaction details / information collected / carried / processed as part of the message / payment instruction) relating to payment systems operated by them is stored in a system only in India. They are also required to report compliance to RBI. In addition, they must submit a Board-approved System Audit Report within the stipulated deadline.

RBI ramps up cards sector supervision

Amid the pandemic, the RBI has been ramping up supervision of the cards sector. For example, last October it introduced a series of rules designed to make digital payments more secure.

According to the new rules, all debit and credit cards at the time of issuance or re-issuance should be enabled for use only at ATMs and point-of-sale (POS) devices within India.

For using the cards outside India, customers require to make a special request to the issuing bank. RBI has urged all banks and issuers to disable online payment for all debit and credit cards, which have not been used for online or contactless transactions in India or abroad.