RBI restricts American Express and Diners Cards from on-boarding new customers
The Reserve Bank of India (RBI) on April 23rd imposed restrictions on American Express Banking Corp. and Diners Club International Ltd. from on-boarding new domestic customers onto their card networks from May 1, 2021.
These companies have been found non-compliant with the directions on Storage of Payment System Data. This order will not impact existing customers," the RBI said in a release.
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).
The RBI has imposed the restrictions on American Express Banking Corp and Diners Club International by an order dated April 23, 2021. These entities have been found non-compliant with the directions on Storage of Payment System Data," the RBI said.
In terms of RBI circular on Storage of Payment System Data dated April 6, 2018, all Payment System Providers were 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, the RBI said.
They were also required to report compliance to RBI and submit a Board-approved System Audit Report (SAR) conducted by a CERT-In empanelled auditor within the timelines specified therein, the RBI said.
The RBI action follows the failure of these companies to comply with the central bank’s instructions.
What is the non-compliance?
On 6 April, 2018 the RBI said it has observed that not all system providers store the payments data in India. In recent times, there has been considerable growth in the payment ecosystem in the country. Such systems are also highly technology dependent, which necessitate adoption of safety and security measures, which are best in class, on a continuous basis, the RBI had said.
“In order to ensure better monitoring, it is important to have unfettered supervisory access to data stored with these system providers as also with their service providers / intermediaries/ third party vendors and other entities in the payment ecosystem,” the RBI said.
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