Will RBI ban impact Mastercard’s advertising?

Only to an extent, believe market experts, as they say that the brand is anyway not a big spender when it comes to media advertising

e4m by Sonam Saini
Updated: Jul 20, 2021 9:33 AM

The Reserve Bank of India (RBI) recently banned Mastercard Asia/Pacific from onboarding new domestic customers. The decision, the central bank said, has been taken as the global card network failed to comply with data localisation rules. So will the restriction impact the advertising spends of the brand? Yes, to some extent, say market experts. However, they also add that the brand doesn't seem to be a big spender when it comes to media advertising.

As per market estimates, Mastercard spent Rs 80 crore on TV, print, radio, and digital advertising in 2018, whereas, in 2019, the total ad spend was around Rs 60-70 crore. In 2020, the company witnessed a massive dip in the total spend that declined to Rs 35 crore due to Covid-19.

According to a senior media planner, who spoke on the condition of anonymity, Mastercard is not big on advertising on media. Instead, they spend a huge amount on retail and partnerships. A lot of their investments go in partnership with banks and promoting directly via banks or other partners, which is a huge marketing investment for them.

So, though the company is not a very heavy spender on media, it has consistently invested in building the brand over the past 10 years. "Earlier the consumer only had two options, Mastercard or Visa, and most people accepted the card that their bank issued. But now consumers are getting more aware and are expressing preferences, and therefore, partnerships with banks and BTL promotions play a role," he shared.

Stressing on the same point, another industry expert explained, "Much of their interaction with consumers is intermediary communication. They invest largely in market influencers--partnerships with banks or financial technology companies. Therefore, advertising is not such a critical component of their brand. Market forces and co-branded marketing is more important for them.”

In September 2018, the company, to encourage digital payments in India, roped in cricketer Mahendra Singh Dhoni as its brand ambassador. Later in 2020, the brand also associated with CSK with a ‘Priceless Moments’ package that the combined TV (Star network HD feeds), Hotstar and TV-to-Mobile targeting app.

"Their brand ambassador might be a sports celebrity, but they do advertise on other properties that cater to a mass audience. They also roped in Irrfan Khan as its face a few years ago to boost the less-cash economy in India. They will still need to do some awareness advertising for their existing customers once they sort out things with RBI," said another media planner who too wished to remain anonymous.

Early this year, Mastercard and Razorpay launched a strategic partnership that combines Razorpay's payment processing capabilities with Mastercard's digital banking solutions and card services. The partnership empowered Indian micro, small and medium enterprises (MSMEs) to digitize their operations.

Meanwhile, in response to a mail sent by exchange4media for an official comment on the advertising aspect, Mastercard clarified that there will be no impact of RBI’s decision on India's current operations.

The official statement read, "Mastercard is fully committed to our legal and regulatory obligations in the markets we operate in. Since the issuance of the 2018 directive requiring on-soil storage of domestic payment transaction data, we have worked closely with the RBI to ensure that we comply with the requirements. While we are disappointed with the stance taken by the RBI, we will continue to work with them and provide any additional details needed to resolve their concerns. This is consistent with our considerable and continued investments in our customers and partners in India to advance the government's Digital India vision."

The RBI circular on the Storage of Payment System Data dated April 6, 2018, stated that all system providers were directed to ensure that within six months, the entire data (full end-to-end transaction details 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 conducted by a CERT-In impanelled auditor within the timelines specified therein.

According to the RBI's official statement, notwithstanding the lapse of considerable time and adequate opportunities being given, the entity has been found to be non-compliant with the directions on Storage of Payment System Data.

This order will not impact existing customers of Mastercard. Mastercard shall advise all card-issuing banks and non-banks to conform to these directions. The supervisory action has been taken in the exercise of powers vested in RBI under Section 17 of the Payment and Settlement Systems Act, 2007 (PSS Act), said RBI. 

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