RBI Mandates Choice for Credit Card Users: Customers to Select Card Networks

In a significant move aimed at fostering greater flexibility and choice for credit card users in India, the Reserve Bank of India (RBI) has issued directives requiring card issuers to offer customers the option to choose from multiple card networks. The new guidelines, announced by the RBI, aim to enhance consumer empowerment and competition within the credit card industry.

Under the fresh directives issued by the central bank, card issuers are prohibited from entering into agreements that restrict them from accessing services from other card networks. This move is poised to break any existing monopolistic practices and promote a more competitive landscape within the credit card market.

The RBI emphasized that card issuers must provide eligible customers with the opportunity to select from a range of authorized card networks at the time of card issuance. This directive ensures that consumers have the freedom to opt for the card network that best aligns with their preferences and requirements.

Furthermore, for existing cardholders, the option to choose from multiple card networks will be made available during the renewal process. This ensures that all customers, both new and existing, are given the opportunity to exercise their choice effectively.

The directive defines authorized card networks as including American Express Banking Corp., Diners Club International Ltd., MasterCard Asia/Pacific Pte. Ltd., National Payments Corporation of India–Rupay, and Visa Worldwide Pte. Limited. These networks have been identified as the platforms from which customers can select their preferred service provider.

However, it’s important to note that these guidelines do not apply universally. Credit card issuers with fewer than 10 lakh active cards are exempt from these directives, allowing smaller players some flexibility in their operations.

The RBI has set a timeline for the implementation of these directives. The provision regarding customer choice at the time of card issuance will come into effect six months from the date of the circular, providing card issuers with ample time to adjust their processes accordingly.

Through these measures, the RBI aims to ensure a fair and transparent credit card ecosystem that prioritizes consumer interests and promotes healthy competition among card networks. By empowering customers with the freedom to choose their preferred card networks, the central bank aims to enhance customer satisfaction and foster innovation within the credit card industry.

Sources By Agencies