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U.S. trade official called India's Mastercard ban 'draconian'-emails

Stock MarketsSep 19, 2021 07:35PM ET
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© Reuters. FILE PHOTO: Smartphone with Mastercard logo is seen in front of displayed stock graph in this illustration taken, July 15, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

By Aditya Kalra

NEW DELHI (Reuters) -A senior U.S. trade official privately criticised India's July decision to ban Mastercard Inc (NYSE:MA) from issuing new cards, calling it a "draconian" move that caused "panic", according to U.S. government emails seen by Reuters.

The documents show frustration within the U.S. government after India's central bank banned https://www.reuters.com/article/india-banking-american-express-idUSL4N2MG3I6 new card issuance by American Express (NYSE:AXP) and Diners Club International in April, then took similar action against Mastercard https://www.reuters.com/world/india/indias-reserve-bank-bans-mastercard-issuing-new-cards-india-2021-07-14 in July.

The Reserve Bank of India accuses the companies of breaking local data-storage rules. The bans do not affect existing customers.

The ban on Mastercard - a top payment network in India alongside Visa (NYSE:V) - triggered a flurry of emails between U.S. officials in Washington and India as they discussed next steps with Mastercard, including approaching the RBI, the government emails show.

"We've started hearing from stakeholders about some pretty draconian measures that the RBI has taken over the past couple days," Brendan A. Lynch, the deputy assistant U.S. trade representative for South and Central Asia, wrote on July 16, two days after the Mastercard announcement.

"It sounds like some others (Amex, Diners) may have been impacted by similar actions recently," wrote Lynch, asking his colleagues in India to get in touch with their central bank contacts "to see what's going on".

Lynch, spokespeople for the Office of the U.S. Trade Representative and the U.S. Embassy in New Delhi did not respond to requests for comment. The U.S. government has not publicly commented on the Mastercard ban.

The RBI did not immediately respond.

A Mastercard spokesman told Reuters, "We've had very constructive engagements with the Indian and U.S. governments over the past few weeks and appreciate the support of both." This includes discussions with the RBI, and Mastercard has "made good progress" as it looks to resolve the situation quickly, he said.

"PANIC", "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 https://www.reuters.com/world/india/indias-ban-mastercard-hit-banks-card-operations-income-sources-2021-07-15 the company and upset India's financial sector as Indian partner banks fear a hit to their income as they struggle to swiftly partner with new networks to offer cards.

The RBI acted against Mastercard because it was "found to be non-compliant" with the 2018 rules despite the "lapse of considerable time and adequate opportunities".

The rules, requiring foreign card networks to store Indian payments data locally for "unfettered supervisory access", were implemented after failed lobbying efforts of U.S. firms also soured trade ties between New Delhi and Washington.

Mastercard has said it was "disappointed" with the decision. The company has told Reuters it had submitted an additional audit report https://www.reuters.com/world/india/mastercard-submits-new-audit-india-after-ban-over-data-handling-2021-07-30 to the RBI before the ban took effect on July 22.

The U.S. government emails show there was hope things could be sorted out before that.

In one, Lynch told colleagues the understanding was that "the RBI has info they need and are hopeful that they will respond appropriately." But as the ban approached, "if the RBI doesn't change course, I'm sure the panic will resume," he wrote.

Days later, he wrote that Mastercard was continuing "to put on the full court press" in Washington.

U.S. trade official called India's Mastercard ban 'draconian'-emails
 

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Comments (4)
vatsal vdamani
vatsal vdamani Sep 19, 2021 10:38PM ET
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everything is fair in business world..not to be suprised
John Hat
John Hat Sep 19, 2021 8:02PM ET
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Indian Nationalists/Fascists keep attacking foreign companies.
Name Me
Name Me Sep 19, 2021 8:02PM ET
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very true।
Name Me
Name Me Sep 19, 2021 8:02PM ET
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They have lost sense of ground reality। pumping up indices is not really a growth, banning MNC's for some hidden agendas is a dangerous precedence. God save the man!
Vishwa Nath
brucewilis Sep 19, 2021 8:02PM ET
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indian government will decide what is good for india not american companies or US government.  next VISA will be thrown out.
Drupal Grupal
Drupal Grupal Sep 19, 2021 9:21AM ET
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on one hand I understand need to keep citizens financial information from leaving the border but on the other hand it's the access to massive data that generates most profit in that industry.
Jose Maderno
Jose Maderno Sep 19, 2021 9:21AM ET
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It is about security or the lack thereof.  My data (the type that can be used for identity theft and privacy related as well) has been lost by the IRS, Marriott, Hilton, American Airlines, United Airlines, Anthem Blue Cross and Blue Shield, Experion, Multiple brokers, multiple banks, and even grocery and department stores.  You should not be in a hurry for western interests to get access to your data.
Obour seth
Obour seth Sep 19, 2021 7:01AM ET
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better day life
 
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