RBI proposes new rules to allow customer to switch between card networks
RBI has issued a draft circular proposing new rules on arrangements between banks, NBFCs, and card networks like Visa, Mastercard, and RuPay for issuing debit, credit, and prepaid cards.
The (RBI) on Wednesday issued a draft circular proposing new arrangements between card networks like , , and RuPay, and banks and NBFCs for issuing debit, credit, and prepaid cards.
RBI announced the proposed new directions after it observed the existing arrangements between card networks and banks and NBFCs, also called “issuers", were “not conducive to the availability of choice for customers”.
Typically, card networks tie up with banks for issuing debit, credit, and prepaid cards to customers, where the choice of the affiliated network (like American Express, Diners Club, Mastercard, RuPay, or Visa as displayed on the card) is decided by the bank.
As per the circular, the RBI has proposed that customers should be given an option by the issuers to choose their choice of card network at any time, creating a level-playing field for all networks.
The RBI proposed to prohibit exclusive tie-ups between issuers and card networks, adding that the former should be allowed to issue cards across more than one card network.
Further, banks, NBFCs, and card networks shall ensure to adhere to the above requirements in a) existing agreements at the time of amendment or renewal thereof, and b) fresh agreements executed from the date of this circular, it added.
The proposed rules shall be effective starting October 1, 2023. Meanwhile, the central bank has invited comments on the draft circular before August.
Authorised card networks in India include , Diners Club, MasterCard, RuPay, and Visa.
Edited by Suman Singh
