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Global payment processor MasterCard has said that the Reserve Bank of India’s directive to store data locally makes the system inefficient in terms of providing safety, security and analytics to Indian 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 is caused by the inefficiency of what that does to the ability to provide safety, security and analytics to India’s banks and merchants.”
Operating issue
Ever since the banking regulator came out with the data localisation directive in April this year, experts have been attributing increased costs by way of data centre infrastructure as the main reason for global companies’ resistance to store data locally in the country. However, Banga said that more than costs involved, it was an operating issue.
Citing examples of what storing data locally could do to the ecosystem and transactions, Banga said that more transactions give better predictability, lowering the false positives, or error in data reporting.
“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; therefore, you leverage the cost of learning by 1/200, meaning you learn in one country and it is available to 200. And I have tonnes of examples of when this has paid off. What India is doing is enabling these benefits to be turned off. So, at the end of the day, it is not a cost issue,” he said, adding that there could be errors in data reporting.
Even as the RBI 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 and the banking regulator for an extension and to relax norms so that they could store mirrored data locally and at their offshore offices. But the RBI did not pay any heed to these demands and, instead, said it would take punitive actions on companies that do not comply.
It has been 15 days since the RBI’s deadline expired, and companies such as MasterCard and Visa, recently made public statements that they are keen on complying but are still talking to the RBI for some relaxation.
“MasterCard has always respected the 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 October 6, 2018, as per the RBI Directive dated April 6, 2018, on data localisation,” MasterCard in a statement said.
Negative impact
It also added that to ensure the safety and security of the Indian payment ecosystem is not compromised and to prevent 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 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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