A senior US business official privately criticized India’s July decision to ban Mastercard Inc (MAN) from issuing new cards, calling it a “drastic” move, according to US government emails seen by Reuters. That’s what caused the “panic”.
Documents show frustration within the US government after India’s central bank banned the issuance of new cards by American Express (AXP.N) and Diners Club International in April, then took similar action against Mastercard in July.
The Reserve Bank of India accuses companies of breaking local data-storage rules. The restrictions do not affect existing customers.
The ban on Mastercard – along with Visa (VN) a top payments network in India – sparked a flurry of emails between Washington and US officials in India, as they discussed next steps with Mastercard, including contacting the RBI , show official email.
“We have begun to hear from stakeholders about some of the drastic measures the RBI has taken over the past few days,” Brendan A. Lynch, deputy assistant US trade representative for South and Central Asia, wrote two days later on July 16. MasterCard announcement.
“It appears that some others (Amex, Diners) have recently been affected by similar actions,” Lynch wrote, asking her colleagues in India to contact their central bank contacts, “to see if for what is happening”.
Lynch, a spokesman for the US Trade Representative’s office and the US embassy in New Delhi did not respond to requests for comment. The US government has not publicly commented on the Mastercard ban.
RBI did not immediately respond.
“Over the past few weeks we have had very constructive engagements with the Indian and US governments and appreciate their support,” a Mastercard spokesperson told Reuters. This includes discussions with the RBI, and Mastercard has made “good progress” as it looks to resolve the situation quickly, he said.
“Terror”, “Full Court Press”
Mastercard counts India as a key growth market. In 2019 it said it was “bullish on India”, a country where it has made major investment bets and built research and technology centres.
The Mastercard ban rattled the company and upset India’s financial sector as Indian partner banks feared hurting their earnings as they struggled to rapidly partner with new networks to introduce cards .
The RBI took action against Mastercard as it was found to be “non-compliance” with the 2018 rules despite a “lapse of considerable time and substantial opportunities”.
The rule, requiring foreign card networks to store Indian payment data locally for “unfiltered supervisory access”, was implemented after US firms’ failed lobbying efforts soured trade ties between New Delhi and Washington Was.
Mastercard said it was “disappointed” with the decision. The company told Reuters that it submitted an additional audit report to the RBI before the ban came into force on July 22.
Emails from the US government showed that there was hope that things would settle before that.
In one, Lynch told colleagues the understanding was that “the RBI has the information they need and expects them to respond appropriately.” But as the ban came to a close, “if the RBI does not change course, I am sure the panic will resume,” he wrote.
A few days later, he wrote that Mastercard was continuing to “put the press in full court” in Washington.
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