In an order, the RBI said American Express and Diners Club have been barred from “on-boarding new domestic customers onto their card networks”.
The RBI cracked the whip in form of supervisory action after the two entities were found not complying with directions on storage of payment system data. In other words, they did not follow the RBI’s directions on ensuring data of transactions, payments, instructions and customer information collected by them is stored in a system within India.
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The entral bank has however clarified that though American Express and Diners Club can’t issue new cards to fresh subscribers, its order will not impact their existing customers.
The two were found guilty of not complying with the terms mentioned in RBI circular on storage of payment system data issued on April 6, 2018.
What’s the non-compliance all about?
“As per the rules, all payment system providers were 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,” the RBI said.
American Express and Diners Club were required to report compliance to RBI and submit a board-approved System Audit Report (SAR) conducted by a CERT-In (under Union Ministry of Electronics and Information Technology) empanelled auditor within the specified timeline.
American Express Banking Corp. and Diners Club International Ltd. are payment system operators authorised to operate card networks in the country under the Payment and Settlement Systems Act, 2007 (PSS Act).
RBI said the supervisory action has been taken in exercise of powers vested in RBI under Section 17 of the PSS Act.
American Express cards have carved a niche among affluent section of society. The company’s first presence in India started with a travel office set up in 1921 but subsequently lost out to later entrants like Visa and Mastercard.
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