NEW DELHI: The banking regulator – Reserve Bank of India – has asked credit card issuers to give their eligible customers an option to choose from multiple card networks at the time of issue. The regulator has also asked card issuers to not enter into any arrangement or agreement with card networks that restrain them from availing the services of other card networks.
In a notification issued on Wednesday, the banking regulator said that some arrangements existing between card networks and card issuers are not conducive to the availability of choice for customers. Therefore, it is necessary in the interest of the payment system and public interest that banks and NBFCs must avoid such restrictive arrangements with card networks.
The directions will be effective six months from the date of the notification. RBI has asked card issuers and card networks to ensure adherence to these requirements in existing agreements at the time of amendment or renewal, and fresh agreements executed.
Usually, authorised card networks tie-up with banks/ non-banks for issuance of credit cards. 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.
In India, the authorised card networks 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 new rule will not be applicable to credit card issuers with the number of active cards issued by them being 10 lakh or less in number. Banks and NBFCs which issue credit cards on their own authorised card network are also excluded from the new rules.