RBI asks banks to let customers choose from multiple card networks

The Reserve Bank of India (RBI) on March 6 said card issuers should not enter into any arrangement with card networks that restrain them from availing the services of other card networks.

The card issuers need to provide an option to their eligible customers to choose from multiple card networks at the time of issue, the RBI said. For the existing cardholders, this option may be provided at the time of the next renewal, the RBI said.

This move comes after the RBI observed that some arrangements existing between card networks and card issuers are not conducive to the availability of choice for customers.

The central bank-listed authorised card networks are American Express Banking Corp, Diners Club International Ltd, MasterCard Asia/Pacific Pte Ltd, and National Payments Corporation of India–Rupay and Visa Worldwide Pte Limited.

The RBI said card issuers and card networks need to ensure the new rules are implemented in existing agreements at the time of amendment or renewal by executing fresh agreements, the RBI said.

The RBI, however, clarified that the new directions are not applicable to credit card issuers with number of active cards issued 10 lakh or less in number. Also, card issuers who issue credit cards on their own authorised card network are excluded from the applicability of the circular, the RBI added.Typically, the authorised card networks tie-up with banks and non-banks for issuance of credit cards. The choice of network for a card issued to a customer is decided by the card issuer and is linked to the arrangements that the card issuers have with card networks in terms of their bilateral agreements.