New Delhi: In a significant move, the Reserve Bank of India (RBI) has mandated banks to offer customers the flexibility to select from multiple card networks. Henceforth, both banks and non-bank entities issuing credit cards will be obligated to provide customers with the option to choose their preferred card network at the time of card issuance. RBI has explicitly instructed that agreements inhibiting customers from accessing services of other card networks are prohibited. To facilitate this directive, RBI has enumerated authorized card networks including American Express Banking Corp, Diners Club International Ltd, MasterCard Asia/Pacific Pte, National Payments Corporation of India-Rupay, and Visa Worldwide Pte. This regulatory measure aims to expand options for credit card users and issuers, addressing constraints posed by certain existing agreements.
Key Directives by Reserve Bank of India (RBI):
The new RBI guidelines forbid card issuers from entering into agreements restricting customers’ access to services offered by other card networks. Consequently, card issuers are mandated to offer eligible customers the choice to select from multiple card networks during card issuance. Existing cardholders will also have this option during their next card renewal.
Rationale behind the Initiative:
RBI’s decision stems from its scrutiny of arrangements between card networks and issuers that were found to impede customers’ freedom of choice in selecting card networks. However, these guidelines exclude credit card issuers with an active card issuance count of Rs 10 lakh or less. Similarly, issuers operating on their proprietary authorized card networks are not covered under these regulations. Notably, RBI had issued a draft circular to this effect in July of the previous year (2023).
