RBI's Draft Rules For Card Issuers May Let Customers Switch Card Networks
The proposed rules would apply to both banks and non-banking financial companies which issue credit, debit, or prepaid cards.
The Reserve Bank of India's newly proposed rules may compel card issuers to stay away from exclusive agreements with card networks such as Mastercard, Visa, or RuPay.
The proposed rules would apply to both banks and non-banking financial companies that issue credit cards, debit cards, or prepaid cards.
"On a review, it is observed that arrangements existing between card networks and card issuers (banks and non-banks) are not conducive to the availability of choice for customers," a draft circular released by the central bank on Wednesday said.
In addition to prohibiting exclusive relationships between card issuers and card networks, the draft circular also proposes the following changes:
Card issuers shall have to issue cards on more than one card network.
Card issuers shall give customers the option to choose between card networks—both at the time of issuance and at any subsequent time.
The proposed rules are set to come into effect starting Oct. 1. The circular has been placed on the RBI's website, and the central bank has invited comments from stakeholders, which are to be submitted by Aug. 4.
Giving eligible customers the choice to switch between card networks could also make the overall playing field more competitive for network companies since a network like RuPay could have a leg up by offering UPI services on credit cards, which other networks currently do not.
In addition to Mastercard, Visa, and RuPay, American Express and Diners Club also operate card networks in India.
