RBI asks banks to allow customers to choose cards from multiple networks
The central bank also asked issuers of credit cards not to enter into any arrangement or agreement with card networks that restrain customers from availing the services of other networks.
The has directed banks to provide their eligible customers with an option to choose from multiple card networks at the time of issuing credit or debit cards, a move which will benefit card users.
The central bank also asked issuers of credit cards not to enter into any arrangement or agreement with card networks that restrain customers from availing the services of other networks.
"On a review, it is observed that some arrangements existing between card networks and card issuers are not conducive to the availability of choice for customers," the Reserve Bank said in a circular.
For the existing cardholders, this option may be provided at the time of the next renewal, it said.
"The RBI being satisfied that it is necessary and expedient, in the interest of payment system and public interest, to do so, hereby, directs... Card issuers shall not enter into any arrangement or agreement with card networks that restrain them from availing the services of other card networks," it said.
The circular listed authorised card networks—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.
Card issuers and networks will have to ensure adherence to the RBI's guidelines in existing agreements at the time of amendment or renewal and when fresh agreements are executed, it said. However, it said the direction would not be applicable to credit card issuers with a number of active cards issued by them being 10 lakh or less in number.
"Card issuers who issue credit cards on their own authorised card network are excluded from the applicability of the circular," it said.
The directions of providing options to the eligible customers to choose from multiple card networks would be effective six months from the date of this circular, it added.
Edited by Kanishk Singh