Data Localisation Will Make Digital Payments Expensive, Inefficient: Mastercard

Mastercard Inc. credit cards are arranged for a photograph in Washington, D.C., U.S. (Photographer: Andrew Harrer/Bloomberg)

Written by
Nishant Sharma
Written by

Nishant Sharma

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Data localisation guidelines put out by the Indian government will make digital payments business expensive and inefficient to provide safety, security and analytics to Indian banks and merchants, the financial services company Mastercard said.

“When we talk about our lack of support for data localisation, it's not caused so much by expenses,” Ajaypal S Banga, the president and chief executive officer of Mastercard, said during an investor call today. “It's caused by the inefficiency of what that does to the ability to provide safety, security and analytics to India's banks and merchants.”

Banga said localising data will also hinder companies from sharing their learnings across markets. “…You're unable to learn from the learnings of one country and apply them to global platforms like ours to every country and… leverage the cost of learning by 1/200—meaning you learn in one country and it's available to 200.”

What India is doing is actually enabling both those benefits to India to be turned off.

Ajay Banga, CEO, Mastercard

Meanwhile, Mastercard said in a statement to BloombergQuint that it has submitted its proposal to Reserve Bank of India confirming the storage of data only in India “within a specified time frame”. It said the Indian data is being stored at their technology centre in Pune as of Oct. 6.

Banga said during the investor call that for storing data locally as per the Indian government's guidelines “is a question of attempting to put a bunch of servers on the ground that enable the data to be kept locally”.

Mastercard's rival Visa, too, said in its earnings call today that they're storing data locally as well. Visa Chief Executive Officer Alfred F Kelly said that as of Oct. 15 they're storing data locally.

The need for data localisation is based on RBI's April notification that gave payment companies six months to store all data within India to ensure access for supervisory and monitoring purposes. The move had split the Indian digital payments industry, with multinational firms seeking easier norms and local players calling it a level-playing field.