Starting September 6, credit card holders in India will have the flexibility to choose their preferred card network (Mastercard, RuPay or Visa) while applying for a new credit card or renewing an existing one. This change is a result of the Reserve Bank of India (RBI) guidelines aimed at improving customer experience and promoting competition in the digital payments landscape.
When applying for a debit or credit card, one usually does not get the option to choose the card network. Typically, the bank has an exclusive tie-up with any of the card networks such as Visa, Mastercard or RuPay etc. Therefore, banks issue cards on their preferred network. “Card issuers should offer their eligible customers the option to choose any of the multiple card networks. Customers can exercise this option at the time of issuance or at any time thereafter,” the RBI had stated in its draft circular.
Please note that the above does not apply to credit card issuers with 10 lakh or less active cards. The circular does not apply to card issuers issuing credit cards through their own approved card network.
Key points:
- Customer Choice: Previously, banks determined the card network. Now, customers have the freedom to select their preferred network based on their needs and preferences.
- RBI Initiative: The RBI guidelines aim to democratise the credit card market and boost competition among networks.
- Exemption for American Express: American Express, which operates its own network, is exempt from the RBI requirements.
- Implementation: Several banks, including Bank of Baroda and YES Bank, have already implemented the new guidelines.
- Benefits for cardholders: Choosing your preferred network can offer advantages such as broader acceptance, exclusive offers and greater convenience.
On March 6, the Reserve Bank of India issued a circular banning banks and non-bank card issuers from entering into exclusive arrangements with card networks. The central bank wants banks and non-banks to give their customers the freedom to choose from multiple card networks.
The RBI guidelines are aimed at pushing networks to compete on benefits, rates and customer experience, potentially leading to better rewards and lower fares.
Increased competition: By offering customers a choice, the RBI aims to create a more competitive environment among card networks.
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Network Specific Offers: This competition could lead to networks offering more exclusive benefits and advantages to attract customers.
Example: The recent introduction of a RuPay lounge at Delhi Airport Terminal 3 demonstrates how networks can differentiate themselves with unique offerings.
However, as per RBI guidelines, card issuers with their own authorised card network (i.e. those that operate their own network) are exempt from the circular’s requirements. American Express, which operates its own network, is exempt from the RBI’s requirements.
First published: September 5, 2024 | 10:15 am IS
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