RBI Directives: Central Bank Mandates Choice Of Multiple Credit Card Networks For Customers

The RBI highlighted that card issuers should refrain from entering into any agreements with card networks that restrict them from accessing services offered by other card networks

The directive concerning customer choice during card issuance will be effective six months from the date of the circular issued by the RBI.

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The Reserve Bank of India (RBI) in a latest directive on Wednesday instructed credit card issuers to provide eligible customers with the option to choose from multiple card networks. In a statement issued by the RBI on Wednesday, the central bank highlighted that credit card issuers should refrain from entering into any agreements with card networks that restrict them from accessing services offered by other card networks.

According to the RBI, customers must be given the choice of selecting from various card networks at the time of card issuance. This provision will also extend to existing cardholders upon the renewal of their cards. The decision by the RBI stemmed from its observation of certain arrangements between card networks and issuers, which were found to limit customers' choices. Through these guidelines, the banking regulator aims to enhance choice and flexibility for customers in both the issuance and usage of credit cards.

As per the RBI, authorised card networks partner both banks and non-bank entities to issue credit cards. The choice of network for a customer's card lies with the card issuer, whether it's a bank or a non-bank institution, and is shaped by the agreements between the issuers and the card networks.

The latest directives from the RBI:

• Prohibition on card issuers entering agreements that limit them from availing services from other card networks.
• Mandatory offering of the choice to eligible customers to select from multiple card networks during card issuance.
• Provision of this option to existing cardholders at the time of their next card renewal.

Authorised card networks

Authorised card networks specified by the RBI 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.

Who are exempted?

It's noteworthy that these directives do not apply to credit card issuers with fewer than 10 lakh active cards. The directive concerning customer choice during card issuance will be effective six months from the date of the circular issued by the RBI.