When the clock strikes midnight in Delhi on Monday, Visa, Mastercard and American Express will be violating the law every time an Indian swipes a credit or debit card.
They will also become unwilling warriors in a budding conflict between America’s technology giants and the Indian government, which wants more control over the data they collect on India’s 1.3 billion residents.
The spark for the current fight is a new law, passed in April and going into effect Monday night, that requires payments companies to store all information about transactions involving Indians solely on computers in the country. The law and the hubbub over it are part of a debate over a concept known as “data localization,” in which a country places restrictions on data as a way to gain better control over it and potentially curb the power of international companies. US firms have lobbied hard against data localization rules around the world.
In India, Visa, Mastercard and American Express, as well as other financial players like Amazon and PayPal, said they needed more time to comply with the order by the country’s banking regulator, the Reserve Bank of India.
The companies told the RBI that their fraud detection and other data processing systems were distributed on machines across the world and could not be quickly redesigned to work in India alone. As an alternative, they offered to store copies of the Indian data in the country for easy access by regulators, tax authorities and law enforcement.
But the RBI would have none of it. In recent phone calls to the top Indian executives of the major payments companies and in letters to the companies last week, the banking regulator warned that it would take action, including imposing fines, if they missed the Monday night deadline.
Mukesh Aghi, the chief executive of the US-India Strategic Partnership Forum, said the payments companies were frustrated with the regulators. “They refuse to sit down and have a discussion,” said Aghi, whose policy group counts the head of Mastercard on its board.
Spokesmen for Visa and American Express declined to comment on their response to the RBI’s local storage rule. Representatives of Mastercard and the RBI did not respond to multiple requests for comment.
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