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YES Bank, RBL Bank and Bajaj Finserv will be most impacted by the Reserve Bank of India decision to bar MasterCard from acquiring new customers. These three banks have nearly all of their credit card business with MasterCard.
RBL Bank’s current run rate of about 1 lakh new credit card issuances per month could be impacted till there is clarity from the RBI on issuing new credit cards on the MasterCard network. The private sector lender on Thursday said it has entered into an agreement with Visa to issue credit cards enabled on the latter’s payment network, but the technical integration is to be completed.
Shifting to other platforms
Others are affected to varying degrees. According to a Nomura report, “HDFC Bank has 60 per cent of its card schemes tied to MasterCard, Amex and Diners, while for Axis Bank and ICICI Bank, this is about 35-36 per cent.” HDFC Bank is already restricted from issuing new cards by the RBI and, hence, not incrementally impacted.
To mitigate the RBI order impact, some banks are looking to shift to other payment platforms including Visa and RuPay. However, it’s not clear if Visa has fulfilled all requirements of data localisation.
According to Siji Philip, Senior Research Analyst at Axis Securities, while RBL Bank and Bajaj Finserv, whose credit card schemes are tied-up with MasterCard, will be impacted, others like Kotak Mahindra Bank, SBI Cards, and ICICI Bank will not be as they have tie-ups with Visa as well.
A note by ICICI Securities said the issue of MasterCard co-branded cards will also stop. “If a particular MasterCard co-branded credit card has high contribution to the overall mix of a credit card player, it will have a higher impact on the issuer’s business growth,” it said. HDFC Bank has three co-branded cards with Mastercard while SBI has two.
Minimal impact: SBI Card
But an SBI Card spokesperson said: “Our new customer acquisition impact is minimal as there are only a few co-branded credit cards on the MasterCard network. All our proprietary products are available on multiple networks.”
Data storage issue: RBI stops MasterCard from adding new customers
In a statement, MasterCard said it is disappointed by the RBI action barring it from acquiring new customers for not complying with data localisation requirements, but said it will continue to work with the regulator to resolve its concerns.
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