Mastercard ban was news to us; will start issuing new credit cards with Visa, RuPay in 90-120 days: Yes Bank

Private-sector lender Yes Bank on Friday said that it expects to start issuing new credit cards over the next three to four months after Mastercard was banned from on-boarding new customers.

“We have already signed an agreement with RuPay for credit cards, and the agreement with Visa will be signed next week... We expect to start credit card issuance in the next 90 to 120 days,” Prashant Kumar, MD & CEO of Yes Bank said in a concall with the media after disclosing the first-quarter earnings.

Earlier this month, the Reserve Bank of India imposed restrictions on Mastercard Asia / Pacific Pte Ltd (Mastercard) from on-boarding new domestic customers (debit, credit or prepaid) onto its card network from July 22, 2021, after it was found to be “non-compliant with the directions on Storage of Payment System Data.”

When asked if the bank was aware that Mastercard was still non-compliant with RBI’s data storage norms and could face regulatory action, Prashant Kumar said “it was news to us,” in response.

According to Nomura, Yes Bank will be among the most impacted bank as its entire credit card scheme is aligned with Mastercard.

The bank said that its 987,000 credit cards in force will not see any impact from the ban on Mastercard, nor will its debit cards. Since its credit card scheme was linked entirely with Mastercard, its credit card issuance will be temporarily hit until its tie ups with other card issuers like Visa and Rupay are operationalised. Yes Bank also said that there would be no short-term impact of the ban on its balance sheet.

“Apart from usual challenges of technology, configuration, authorisation, settlement and other processes which need to be integrated with the bank, there is also a shortage of chips globally which makes in general issuance of these cards difficult,” Macquarie said in a recent note, adding that card issuance may be hit for the industry over the next two months.

Other banks have also initiated talks with card issuers like Visa and RuPay after Mastercard was placed under restrictions. RBL Bank earlier disclosed to exchanges that it has entered into an agreement with Visa to issue credit cards, which could take upto 8 to 10 weeks.

“RBL Bank currently issues credit cards on the Mastercard network only. The debit and prepaid cards issued by the Bank are already enabled on other payment networks in addition to the Mastercard network. Separately, RBL Bank Limited(“RBL Bank”) has entered into an agreement with Visa Worldwide Pte. Limited (“Visa”) yesterday 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 8 to 10 weeks,” RBL Bank had disclosed to exchanges.

“In the interim, our Bank’s current run rate of approx. 100,000 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. As of date RBL Bank has approx. 3 million credit card customers and is the fifth largest credit card issuer in the country with approx. 5 percent market share,” RBL Bank further said.

Federal Bank, too, said it had started the process of technical certification with both Visa and Rupay. “We plan to issue Visa and Rupay backed credit cards in the next two months..We are hopeful that Mastercard will be able to resolve its issue with the regulator..We should have things in place for our cards business by September,” said Shyam Srinivasan, MD & CEO of Federal Bank while addressing the media after disclosing the bank’s earnings today.