Lenders such as Yes Bank and RBL Bank with exclusive tie-ups with Mastercard will now have to look for new partners, which could translate into an advantage for RuPay and Visa. Further, co-branded cards with Mastercard will also be impacted.
Private sector lender RBL Bank on Thursday said it has entered into an agreement with Visa on July 14 to issue credit cards enabled on the Visa payment network.
“RBL Bank expects to start issuance of credit cards on the Visa payment network post the technology integration which is expected to take eight to 10 weeks,” it said in a stock exchange filing.
Data storage issue: RBI stops MasterCard from adding new customers
Changing equations
Meanwhile, the bank’s current run rate of about 1 lakh 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 further said.
RBL Bank currently issues credit cards on the Mastercard network only. It has about 30 lakh credit card customers and is the fifth largest credit card issuer in the country with nearly five per cent market share.
A report by ICICI Securities said that RBL Bank and Yes Bank issue only cards with Mastercard. Other lenders like Axis Bank, Kotak Mahindra Bank and Citi have atleast two tie ups – with Mastercard and Visa.
Meanwhile, State Bank of India and HDFC Bank have tied up with more payment networks.
“The issuance of co-branded cards with Mastercard will also stop due to the RBI restriction. If a particular Mastercard co-branded credit card has high contribution to the overall mix of a credit card player, it will have a higher impact on the issuer’s business growth,” the report noted.
HDFC Bank has three co-branded cards with Mastercard, while SBI has two such cards.
The RBI on July 14 took supervisory action against Mastercard and barred it from acquiring new customers (debit, credit or prepaid) from July 22 for not complying with data localisation requirements.