The Reserve Bank of India (RBI) has introduced comprehensive guidelines to enhance customer freedom and promote equitable competition within the credit card market. Effective six months from March 6, 2024, these regulations aim to dismantle existing monopolistic practices by forbidding card issuers from engaging in exclusive partnerships that limit the availability of multiple card networks to consumers.
The initiative requires issuers to offer a selection of card networks at the time of card issuance or renewal, ensuring consumers have the freedom to choose their preferred network.
At present, the choice of network for a card issued to a customer is decided by the card issuer (bank / non-bank) and is linked to the arrangements that the card issuers have with card networks in terms of their bilateral agreements.
“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 RBI noted in a circular.
In exercise of the powers conferred under Section 18 read with Section 10(2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), the RBI has directed that:
a. Card issuers shall not enter into any arrangement or agreement with card networks that restrain them from availing the services of other card networks.
b. Card issuers shall provide an option to their eligible customers to choose from multiple card networks at the time of issue. For existing cardholders, this option may be provided at the time of the next renewal.
Authorised card networks include American Express, Diners Club International, MasterCard Asia/ Pacific, National Payments Corporation of India–Rupay, and Visa Worldwide.
Card issuers who issue credit cards on their own authorised card network are excluded from the applicability of the circular.
