RBI Mandates Choice: Customers Can Select Credit Card Networks
- ByStartupStory | March 6, 2024
The Reserve Bank of India (RBI) has mandated banks and non-banking financial companies (NBFCs) to offer customers the choice of selecting from multiple networks when issuing credit cards.
“Existing cardholders may be given the option at the time of their next renewal,” stated the RBI in a communication to financial institutions and payment system providers. The directive, effective six months later from September 6, aims to enhance customer choice in credit card networks.
In exercising its powers under the Payment and Settlement Systems Act, 2007, the RBI emphasized the necessity of this measure in promoting a competitive payment system and serving public interest. The central bank highlighted concerns regarding certain arrangements between card networks and issuers that limit customer choice.
The RBI prohibited card issuers and networks from imposing any agreement restricting customers from accessing services of other card networks. Currently, card issuers determine the network for a card based on bilateral agreements, but this directive seeks to broaden consumer options.
Notably, the directive exempts credit card issuers with one million or fewer active cards, as well as those with their own authorized networks. Authorized 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.
The move comes amid a growing credit card market in India, with the total number of cards nearing the 100 million milestone. In 2023 alone, India witnessed the addition of 16.71 million cards, reflecting significant market growth compared to the previous year.
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