RBI To Allow Customers To Choose Card Networks Like Visa, Mastercard, And RuPay

The Reserve Bank of India (RBI), in a draft circular on Wednesday, directed card issuers to offer their customers the option to choose card networks like Visa, Mastercard, RuPay, American Express, etc., from October 1, 2023. As per its circular, customers can now select one or more networks for different cards during issuance or in the future.

Which Are The Card Networks?  

The card networks operating in India include Visa Worldwide Pte. Ltd., MasterCard Asia-Pacific Pte. Ltd., American Express Banking Corp., Diners Club International Ltd., and Rupay, developed by the National Payments Corporation of India.  

Who Are The Card Issuers?  

Card issuers are banks and non-banking financial companies (NBFCs). As practice until now, they choose the card network for various customer services through bilateral agreements with the network companies. In the circular, RBI observed “that (the) arrangements between card networks and card issuers are not conducive to the availability of choice for customers.” RBI, therefore, has directed the card issuers to factor in the “public interest”.  

Consequently, the central bank gas issued the following instructions for card issuers.  

•  The card issuers will not enter into any restricting agreement with card networks which stops them from using other networks and services.  

•  The card issuers will issue cards from multiple networks across all authorised networks.  

•  The card issuers will offer customers an option to choose from among the card networks they offer. The option will be available to the customers at the time of issue or at any subsequent time.  

•  The card issuers and the card networks must follow these instructions and comply with these requirements at the time of amendment in the existing agreements or at the time of renewal. Moreover, from July 5, 2023, the agreements executed must adhere to the abovementioned requirements.  

•  RBI data for May 2023 shows 87,747,311 credit cards and 9,73,926,235 debit cards issued outstanding after adjusting the withdrawn and cancelled cards.  

•  The bank has asked for feedback from the stakeholders on the draft circular. They can send comments or feedback to RBI through email or post. The last date to give the input is August 4, 2023.