InvestorQ : What does it mean now that the ban on Amex has been lifted for new card issues?
Neelam Naik made post

What does it mean now that the ban on Amex has been lifted for new card issues?

Anu Biswas answered.
2 months ago

It is final, American Express is no longer under RBI ban on issue of fresh credit cards. The ban has been lifted after a gap of almost 15 months pertaining to onboarding of fresh customers. Amex can now issue fresh cards to Indian customers. However, Amex was not alone. In 2021, even Diners Club and MasterCard had been banned from onboarding fresh customers, apart from Amex. The ban is with respect to Storage of Payment System Data within the limits of India. The ban has already been lifted on Diners and MasterCard.

Did it hit the customer base of Amex? Not much, but there are losses nevertheless. For instance, Amex had 1.51 million credit card customers prior to the ban which fell to 1.36 million as of date. So, about 1.5 lakh customers were lost or around 10%. The good thing was that most of the Amex customers are premium customers who normally stick to a brand. The loss was on fresh onboarding. Amex is a payment system operator authorised to operate card networks in India under the Payment and Settlement Systems Act, 2007.

The new regulations announced by the RBI in 2018 stipulate that all payment system operators must necessarily and mandatorily store their entire data in a system located physically in India. In addition, they must also report compliance to the RBI apart from submitting a board-approved System Audit Report (SAR). In this case, end to end transaction details include information collected, carried and processed as part of the message plus payment instruction locally. RBI wants to retain full control in the process.