Visa has become one of the first global financial services companies to have complied with the Reserve Bank of India’s data localisation norms. This will pave the way for the California-based payment gateway company to garner a larger market share in India at a time when its rivals, including Mastercard and American Express, have been barred from taking new users for not complying with the data localisation rules.
“Visa can keep on-boarding customers and work with Indian players for issuing debit and credit cards since they have complied with the data localisation norms,” said a top banking industry source.
Visa did not respond to an email query from BusinessLine but most of the banks which had exclusive partnerships with Mastercard confirmed that they are in the process of shifting their card network to the remaining two players — Visa and home-grown RuPay.
The advantage for Visa may be greater given its global presence and reward points. At stake is a market that accounted for a total credit card spend of ₹54,700 crore in May 2021. “May 2021 credit card spend remained higher than monthly credit card spend between April and September 2020,” said a recent report by ICICI Securities. Most lenders have become ambitious in credit card roll-outs, eyeing a greater portion of spending by existing customers.
According to RBI data, there were 6.23 crore outstanding credit cards as of May 31, 2021, and 90.23 crore debit cards.
“The ban was a clearly thought out move which ensures that the RBI’s norms are taken seriously and complied with fully while ensuring that banks have enough partners to issue cards,” said an industry source.
RuPay and Visa
“Data localisation is good for the country in terms of control of data and governance of these companies. Visa, being the dominant player in terms of credit cards and also RuPay get an advantage as others like Mastercard, American Express and Diners Club have been barred as of now. Larger banks already have at least two issuing partners on board but smaller banks with only Mastercard are now looking for alternatives. We have been intimated by MasterCard that is submitting supplementary audit system report for the year 2021 to the RBI but it is not certain when the ban will be lifted,” said Vishwas Patel, Chairman, Payments Council of India and Executive Director, Infibeam Avenues Limited.
According to market estimates, RuPay has the largest number of cards in force in the market and Visa has the second largest market share. Visa, being a global brand, now has the opportunity to bridge the gap with the biggest player in this segment, RuPay.
Lenders including RBL Bank, Federal Bank, and Yes Bank, which had exclusive tie ups with Mastercard for credit cards, are now working on new partnerships. While RBL Bank has tied up with Visa, Federal Bank and Yes Bank are in talks with both Visa and RuPay.