Reserve Bank has instructed banks to offer their eligible customers the opportunity to select from multiple card networks when they issue credit or debit cards. This decision will be advantageous for card users. Additionally, the central bank has advised credit card issuers not to engage in any agreements or arrangements with card networks that prevent customers from utilizing the services of other networks. In a circular, the Reserve Bank stated, “Upon review, it has been observed that certain agreements between card networks and card issuers do not promote customer choice.” For current cardholders, this choice will be made available during the next renewal process. “The RBI, recognizing the necessity and expediency of this action in the interest of the payment system and public welfare, hereby directs… Card issuers are prohibited from entering into any agreements or arrangements with card networks that restrict them from utilizing the services of other card networks,” the circular stated.
Authorized card networks listed in the circular include American Express Banking Corp, Diners Club International Ltd, MasterCard Asia/Pacific Pte Ltd, National Payments Corporation of India – Rupay, and Visa Worldwide Pte Limited.
According to the circular, card issuers and networks must ensure compliance with the RBI’s guidelines in existing agreements during amendments, renewals, and when executing new agreements. However, the circular does not apply to credit card issuers with 10 lakh or fewer active cards issued by them. “The circular does not apply to card issuers who issue credit cards on their own authorized card network,” it stated. The requirement to provide eligible customers with options to choose from multiple card networks will come into effect 6 months from the date of this circular.