RBI restricts American Express, Diners Club from adding new customers from May 1

RBI fixes American Express and Diners Club Cards for violating data storage norms in India

The Reserve Bank of India (RBI) fixes American Express and Diners Club Cards for violating data storage norms in India. RBI has restricted American Express Banking Corp and Diners Club International Ltd from adding new domestic customers onto their card networks from May 1 for violating data storage norms. This order will not impact the existing customers of these two entities, the Central Bank said in a statement on Friday.

American Express Banking Corp and Diners Club International Ltd are Payment System Operators authorised to operate card networks in the country under the Payment and Settlement Systems Act, 2007 (PSS Act). The RBI has imposed the restrictions on American Express Banking Corp and Diners Club International by an order dated April 23, 2021.

The Reserve Bank of India (RBI) has, by order dated April 23, 2021, imposed restrictions on American Express Banking Corp. and Diners Club International Ltd. from onboarding new domestic customers onto their card networks from May 1, 2021.

“These entities have been found non-compliant with the directions on Storage of Payment System Data,” the RBI said, detailing the PSS Act violations committed by the giant Credit Card companies. In April 2018, all payment system providers were directed to ensure that within a period of six months the entire data (full end-to-end transaction details/ information collected/ carried/ processed as part of the message/ payment instruction) relating to payment systems operated by them is stored in a system only in India.

“The Reserve Bank of India (RBI) has, by order dated April 23, 2021, imposed restrictions on American Express Banking Corp. and Diners Club International Ltd. from onboarding new domestic customers onto their card networks from May 1, 2021. These entities have been found non-compliant with the directions on Storage of Payment System Data. This order will not impact existing customers.

“American Express Banking Corp. and Diners Club International Ltd. are Payment System Operators authorised to operate Card Networks in the country under the Payment and Settlement Systems Act, 2007 (PSS Act). The supervisory action has been taken in exercise of powers vested in RBI under Section 17 of the PSS Act,” said the RBI circular issued on Friday evening.

Both Credit Card companies are also required to report compliance to RBI and submit a board-approved System Audit Report (SAR) conducted by a CERT-In empanelled auditor within the timelines specified.