According to two senior exe 86cutives of private sector banks who spoke on the condition of anonymity, the Reserve Bank of India's (RBI) decision to bar global card network Mastercard from issuing new cards, which comes on the heels of similar punitive actions against two other card networks, will cause significant disruption in India's evolving payments system,On the condition of anonymity, two top executives from private sector banks remarked.
Banks that rely only on Mastercard will have to wait at least two months to switch to Visa, the only worldwide survivor thus far, or indigenous RuPay.
For failing to comply with RBI's data localization standards, Mastercard was barred from onboarding new clients as of July 22.
A legislation enacted in April 2018 that required all payments data from India to be retained in the nation is at the heart of these restrictions.
Many businesses objected at first, but the majority soon agreed.
V the first banker “A fine would have been more reasonable than a ban because such sudden changes cause a lot of disturbance not only for banks, but also for customers,” the banker stated. It would have been preferable if the RBI had issued a six-month warning to stakeholders.
According to the second banker described above, the banking regulator is delivering a bigger message that everyone must follow local rules.
The second banker stated, "RBI was earlier more facilitative in its negotiations and did not come across publicly as severe."
Visa and RuPay, on the other hand, have benefited from the central bank's activities. Experts predict that Visa will earn the most market share in credit cards, while RuPay will increase its position in the debit card sector.
“In terms of credit cards, Visa is poised to reap a windfall in the coming months as banks have little choice.
According to Parijat Garg, a fintech specialist, "RuPay will not find much profit in credit cards because many global websites do not accept the card network even today."
When asked about data localization compliance and whether the firm was in contact with the central bank, a Visa spokesman said the company would respond as soon as it received further information.
According to a research released on Thursday by brokerage Nomura, the Mastercard limits will have the greatest impact on three credit card issuers. The entire credit card scheme of RBL Bank, Yes Bank, and Bajaj Finserv is based on Mastercard.
RBL Bank said in a regulatory filing on Thursday that it plans to begin issuing credit cards on the Visa payment network after the technical integration, which is expected to take eight to ten weeks.
According to the Nomura analysis, HDFC Bank has 60 percent of its card schemes related to Mastercard, American Express, and Diners Club, compared to 35-36 percent for Axis Bank and ICICI Bank. HDFC Bank, on the other hand, has been subject to RBI restrictions on credit card issuances since December and hence may not be adversely affected by the suspension.
Experts also believe that the Mastercard prohibition will have an influence on liability account acquisition because debit card issuing would be affected. “In FY21, large banks like HDFC Bank and Axis Bank added around 6.5-7 million liability accounts. While the exact ratio of Mastercard vs. Visa vs. RuPay debit cards is unknown, most banks accept all three.According to a Macquarie analysis, "the ban may have a temporary impact on liability account acquisitions." isa and Mastercard, for example, are systemically significant since they handle thousands of transactions.in the opinion of the first banker “A fine would have been more reasonable than a ban because such sudden changes cause a lot of disturbance not only for banks, but also for customers,” the banker stated. It would have been preferable if the RBI had issued a six-month warning to stakeholders.
According to the second banker described above, the banking regulator is delivering a bigger message that everyone must follow local rules.
The second banker stated, "RBI was earlier more facilitative in its negotiations and did not come across publicly as severe."
Visa and RuPay, on the other hand, have benefited from the central bank's activities. Experts predict that Visa will earn the most market share in credit cards, while RuPay will increase its position in the debit card sector.
“In terms of credit cards, Visa is poised to reap a windfall in the coming months as banks have little choice.
According to Parijat Garg, a fintech specialist, "RuPay will not find much profit in credit cards because many global websites do not accept the card network even today."
When asked about data localization compliance and whether the firm was in contact with the central bank, a Visa spokesman said the company would respond as soon as it received further information.
According to a research released on Thursday by brokerage Nomura, the Mastercard limits will have the greatest impact on three credit card issuers. The entire credit card scheme of RBL Bank, Yes Bank, and Bajaj Finserv is based on Mastercard.
RBL Bank said in a regulatory filing on Thursday that it plans to begin issuing credit cards on the Visa payment network after the technical integration, which is expected to take eight to ten weeks.
According to the Nomura analysis, HDFC Bank has 60 percent of its card schemes related to Mastercard, American Express, and Diners Club, compared to 35-36 percent for Axis Bank and ICICI Bank. HDFC Bank, on the other hand, has been subject to RBI restrictions on credit card issuances since December and hence may not be adversely affected by the suspension.
Experts also believe that the Mastercard prohibition will have an influence on liability account acquisition because debit card issuing would be affected. “In FY21, large banks like HDFC Bank and Axis Bank added around 6.5-7 million liability accounts. While the exact ratio of Mastercard vs. Visa vs. RuPay debit cards is unknown, most banks accept all three.According to a Macquarie analysis, "the ban may have a temporary impact on liability account acquisitions."
@All Time Highlights
Super article to read about the news.
ReplyDeleteThank you for the information