RBI restricts American Express and Diners Cards from new customer acquisition under PSS Act

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The Reserve Bank of India (RBI) on Friday, April 23, 2021, imposed restrictions on American Express Banking Corp. and Diners Club International Ltd. from on-boarding 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).

What is PSS Act ?

The Payments and settlements system (PSS) is an Act to presents the regulation and supervision of payment systems in India and designates the Reserve Bank of India (RBI) as the authority for that purpose and all related matters.

Objective of PSS

The Payment and Settlement Systems Act 2007, set up by the RBI, provides for the regulation and supervision of payment systems in India and designates the RBI as the authority for that design in each & every related matter. To execute its powers and perform its functions and discharge its duties, the RBI is permitted under the Act to constitute a committee of its central board, which is known as the Board for Regulation and Supervision of Payment and Settlement Systems.

Payment system data to be stored in India only

The supervisory action has been taken in exercise of powers vested in RBI under Section 17 of the PSS Act

In terms of the RBI circular on Storage of Payment System Data dated April 6, 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. They were 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 therein.