RBI’s New Draft Rule to Promote Credit Card Portability

The Reserve Bank of India (RBI) on July 5, 2023, has come up with a set of proposed rules which could impact the exclusive agreements that card issuers engage with card networks.

The apex bank, through its circular on arrangements with card networks for the issue of debit, credit, and prepaid cards, has highlighted that card issuers shall offer the facility toward issuance of cards across more than one card network.

The proposed rules would apply to banks as well as non-banking financial companies (NBFCs) that issue credit cards, debit cards, or prepaid cards, as per the central bank’s proposal.

The RBI draft also stated that the existing arrangements between various card networks, including Visa, Mastercard, or RuPay and card issuers are not conducive for customers when it comes to offering sufficient choices.

Besides Mastercard, Visa, and RuPay, some of the other companies that operate card networks in the country include American Express and Diners Club.

In addition, the apex bank has outlined several changes, including stating that card issuers should refrain from entering into any arrangement or agreement with card networks that limit them from availing of the services of other card networks.

Besides, they should offer an option to customers to choose any one from a basket of card networks. The card issuers must provide cards on more than one card network and extend customers an option when it comes to choosing between card networks during the time of issuance and subsequently, states the RBI.

The apex bank also stated that it is up to card issuers and card networks to ensure adherence to the existing agreements during the time of amendment or renewal.

The proposed set of rules is likely to give a boost to customer choice while promoting a more competitive scenario in the card network industry. The RBI has invited opinions from various stakeholders on the draft circular up to August 4, 2023.