After RBI action on Mastercard, RBL Bank switches to Visa
The RBL Bank said on Wednesday that it has entered into an agreement with Visa Worldwide to issue credit cards enabled on its network. The decision was taken after the Reserve Bank of India (RBI) barred Mastercard Asia Pacific from onboarding new credit, debit and prepaid card customers, the bank said.
The RBI's decision will come into effect from July 22. RBL Bank has so far been issuing credit cards on the Mastercard network only.
"Our bank's current run rate of approximately 1,00,000 new credit card issuances per month could potentially be impacted till such time that there is clarity from the regulator on issuing new credit cards on the Mastercard network or till the technical integration with Visa is complete," RBL Bank said in a regulatory filing.
The bank said it expects the issuance of credit cards on the Visa payment network within eight to 10 weeks. RBL shares fell as much as 3.2% after it warned that card issuances per month will be impacted until then.
The RBL Bank has approximately 3 million credit card customers and is the fifth largest credit card issuer in the country with approximately 5 per cent market share.
The RBI barred Mastercard from signing up new card customers over non-compliance with local data storage norms. “Notwithstanding the lapse of considerable time and adequate opportunities being given, the entity has been found to be non-compliant with the directions on Storage of Payment System Data,” an RBI press release said.
The RBI further said that the supervisory action will not impact existing customers of Mastercard.
Mastercard has so far not responded to the RBI action.
Three months ago, the central bank had barred American Express Banking Corp and Diners Club International Ltd from onboarding new domestic customers from May 1, citing the same reason.