RBI issues Credit Card Network Choice Guidelines: Know All Details Here

In a move to foster increased customer choice and competition in the credit card industry, the Reserve Bank of India (RBI) has issued directives to authorised card issuers regarding their arrangements with card networks for the issuance of credit cards.

The RBI, through its Department of Payment and Settlement Systems, reviewed the existing arrangements between card networks and card issuers and identified concerns regarding the limited choice available to customers. Card issuers are prohibited from entering into any agreements or arrangements with card networks that restrict them from availing the services of other card networks. Card issuers are mandated to provide eligible customers with the option to choose from multiple card networks at the time of credit card issuance. Existing cardholders will be given this choice at the time of the next renewal.

The authorized 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 Card issuers and card networks are required to adhere to these directives in existing agreements at the time of amendment or renewal and in fresh agreements executed. The directives do not apply to credit card issuers with an active card issuance of 10 lakh or less. Card issuers who issue credit cards on their own authorized card network are exempt from the circular’s applicability.

The directives pertaining to customer choice (para 3(b)) will come into effect six months from the date of this circular. Para 3 is reproduced for convenience as follows: In exercise of the powers conferred under Section 18 read with Section 10(2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), the RBI being satisfied that it is necessary and expedient, in the interest of payment system and public interest, to do so, hereby, directs as under: a) Card issuers shall not enter into any arrangement or agreement with card networks that restrain them from availing the services of other card networks. b) Card issuers shall provide an option to their eligible customers to choose from multiple card networks at the time of issue. For existing cardholders, this option may be provided at the time of the next renewal.

The RBI’s latest directives aim to enhance competition and empower customers in the credit card market, ensuring a more diversified and consumer-centric approach to credit card issuance. The circular underscores the RBI’s commitment to fostering a transparent and competitive financial ecosystem. For further details and clarifications, stakeholders are encouraged to refer to the official circular on the RBI website.

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