In April, India’s central bank said payments companies must store payments data locally from October for better monitoring of the information. Foreign companies have been seeking relaxation of the rule so that they can store data both locally and at their offshore offices.
“When we talk about our lack of support for data localisation, it is not caused so much by expenses. It is caused by the inefficiency of what that does to the ability to provide safety, security and analytics to India’s banks and merchants,” Ajay Banga, Mastercard’s president and CEO, said at an investor call on Tuesday. “Secondly, if you localise, you are unable to learn from the learnings of one country and apply them to the global platforms like ours to every country and leverage the cost of learning by 1/200 — meaning you learn in one country and it’s available to 200. What India is doing is actually enabling both those benefits to India to be turned off.”
The company has started storing data locally, it said during the investor call discussion. In terms of how data is stored locally, Banga said: “Managing that data localisation is a question of attempting to put a bunch of servers on the ground that enable their data to be kept locally.”
With the Reserve Bank of India’s push for data localisation by the payments industry, global financial service companies, especially those from the US, were trying to lobby the government to seek a relaxation of the rule. Last week, Visa, the world’s second-largest card payment firm, said it has been working towards implementing a solution to comply with the RBI’s requirements and has started storing data locally since October 15 to facilitate the RBI’s requirement of access to Indian cardholder payment transaction data.
“We have submitted a detailed status update and action plan to the RBI, including how we will re-architect our existing global processing systems to fully comply with the data-only-in-India requirement.” Visa CEO Alfred F Kelly Jr said during the company’s quarterly earnings call with analysts. “Our technology teams are working virtually around the clock to complete our solution with minimal impact to our clients and our cardholders.”
Over the past two years, the government has implemented several measures to incentivise merchants and consumers to move to digital payments, including capped PoS terminal charges and no tax on POS imports, which helped companies like Mastercard and Visa grow 20-30% every quarter in India after demonetisation in November 2016.
The RBI’s circular also covers firms such as Paytm, WhatsApp and Google which offer electronic or digital payment services. At present, most of the data is stored, in cloud, outside India.
In India, Mastercard, Visa and American Express still dominate payments, with a 70% share, and transactions worth Rs 94,199 crore have taken place under them until June this year, as per RBI data.
(This story has been sourced from an RSS feed and was originally published on The Economic Times.)