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Global payment processor MasterCard says that the Reserve Bank of India’s directive of storing data locally makes the system inefficient in terms of providing safety, security, and analytics to banks and merchants.
Responding to a query on India’s data localisation at a global investor call, MasterCard CEO and President, Ajaypal Singh Banga, said, “What we are referring to when we talk about our lack of support for data localisation is not caused so much by expenses. It's caused by the inefficiency of what it does to the ability to provide safety, security, and analytics to India's banks and merchants.”
Ever since the banking regulator came out with the data localisation directive in April this year, experts tracking the payment ecosystem have been attributing increased costs due to data centre infrastructure as the main reason for the global companies’ resistant to store data locally in the country. Banga says more than cost, it is an operating issue.
Citing examples of what it could do to the ecosystem and transactions, Banga says that more transactions give better predictability and lower the false positives, which in simpler words mean error in data reporting.
“… if you localise, you're unable to learn from the learnings of one country and apply them to the global platforms like ours to every country, and therefore you leverage the cost of learning by 1/200, meaning you learn in one country and it's available to 200. And I have tons of examples of when this has paid off. What India is doing is actually enabling both those benefits to India to be turned off. So at the end of the day, it's not a cost issue is what I'm trying to tell you,” he said, adding that there could be errors in data reporting.
Even as RBI had set a deadline of October 15 for all payment companies to comply with the localisation norms, several foreign companies, including MasterCard, American Express, Visa and PayPal have been lobbying with the Indian government as well as the banking regulator for an extension and to relax the norms so that they could store a mirrored data locally and at their offshore offices. But RBI did not pay any heed to these demands and instead said it will take punitive actions on companies that do no comply.
It has been 15 days since the RBI’s deadline got over, companies like Mastercard and Visa recently made public statements that they are keen on complying while still talking to the RBI for some relaxation.
MasterCard in a statement said, “Mastercard has always respected RBI’s directives and ensured due compliance of the same. We confirm that all new Indian transaction data is being stored at our technology centre in Pune as of 6th October, 2018 as required per the RBI Directive dated 6th April, 2018 on data localisation.”
It also added that to ensure that the safety and security of the Indian payment ecosystem is not compromised, and further, that there is no negative impact or disruption to Indian consumers, banks and merchants, Mastercard has submitted its proposal to the RBI which confirms storage of data only in India within a specified timeframe.
According to an RBI data, MasterCard, Visa and American Express still dominate the payment ecosystem, with transactions worth ₹94,199 crore as of June 2018, with UPI at ₹40,834 crore and wallets at ₹14,632 crore.
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