American Express can onboard new customers in India: RBI

The Reserve Bank of India (RBI) has allowed American Express to onboard new customers with immediate effect after the U.S.-based credit card company complied with RBI regulations on data storage.

"In view of the satisfactory compliance demonstrated by American Express Banking Corp. with the Reserve Bank of India (RBI) circular dated April 6, 2018 on Storage of Payment System Data, the restrictions imposed, vide order dated April 23, 2021, on onboarding of new domestic customers have been lifted with immediate effect," the banking regulator says in statement.

The RBI had last year imposed restrictions on American Express from on-boarding new domestic customers onto its card network from May 01, 2021 for non-compliance with the regulator's data storage norms.

This comes two months after the central bank lifted restrictions on Mastercard Asia Pacific Pte. Ltd., allowing the American financial services firm to issue new debit and credit cards in the country.

Mastercard was the third US card network which was barred by the RBI from adding new customers. The banking regulator had banned Diners Club International and Amex from onboarding new customers from May 1, 2021.

While the RBI lifted restrictions on Diners Club in November 2021, the ban on adding new customers continued for Amex until now.

The RBI's data storage guidelines issued in 2018 state that all system providers shall ensure that the entire data relating to payment systems operated by them are stored in a system only in India. This data includes the full end-to-end transaction details, information collected, carried, processed as part of the payment instruction.

It is observed that not all system providers store the payments data in India. In order to ensure better monitoring, it is important to have unfettered supervisory access to data stored with these system providers as also with their service providers, intermediaries, third party vendors and other entities in the payment ecosystem, the regulator said in April 2018, giving card networks six months to comply with these norms.

Meanwhile, American Express welcomed the central bank's decision to lift restrictions on adding new domestic customers in India. "We are committed to giving our customers access to premium services, experiences and valuable insights that enrich lives and build business success," the card issuer says.

In June, the Reserve Bank of India enhanced the limit on recurring payments from ₹5,000 to ₹15,000 to facilitate larger value transactions like insurance premia and education fee. It also proposed linking of credit cards to UPI, starting with RuPay credit card. This arrangement is expected to provide more avenues and convenience to customers while making payments through the UPI platform.