The Reserve Bank of India (RBI) has asked banks to provide eligible customers with an option to choose from multiple networks while issuing credit cards. The directive means customers will now be able to choose from card networks such as Visa, Mastercard and others at the time of issuance.
The central bank also asked issuers of credit cards not to enter into any arrangement or agreement with card networks that restrain customers from availing of services of other networks. Welcoming the decision, banks said the RBI’s move will offer more choices to customers.
“On a review, it is observed that some arrangements existing between card networks and card issuers are not conducive to the availability of choice for customers,” the Reserve Bank said in a circular. “Card issuers shall not enter into any arrangement or agreement with card networks that restrain them from availing the services of other card networks.”
For existing cardholders, this option may be provided at the time of the next renewal, it said.
“We support the regulator’s efforts at enhancing choice for cardholders,” said Mastercard in a statement.
Currently, the card issued to a customer is decided by the issuing bank or non-bank and is linked to the arrangements that issuers have with networks in terms of their bilateral agreements.
“This is in line with RBI’s vision of bringing in credit card portability, offering customers the choice of a network. As a leading bank, we support this. As of today, we work with all key networks – both international and RuPay,” said Ambuj Chandna, president – consumer assets, Kotak Mahindra Bank. The lender offers a wide range of six credit cards on RuPay which can be used for UPI transactions, he added.
The requirement to offer customers a choice of card networks will become mandatory six months from March 6, the RBI added.
The RBI said the direction would not be applicable to issuers with number of active cards issued by them being 10 lakh or less in number.
“Card issuers who issue credit cards on their own authorised card network are excluded from the applicability of the circular,” it said.
Banks issue credit cards in partnership card networks such as American Express Banking, Diners Club International, MasterCard Asia/Pacific, Visa Worldwide and National Payments Corporation of India. The central bank has first issued a draft circular in this regard in July 2023.
