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The Reserve Bank of India (RBI) said that card issuers should not enter into any agreements with card networks that prevent them from availing the services of other card networks. The central bank also said that card issuers must provide their eligible customers with the option to choose between multiple card networks at the time of issuance.
This option may be offered to existing cardholders at the time of next renewal, the RBI said after observing that some existing agreements between card networks and card issuers are not conducive to availability of options to customers.
What is the objective of the new directives?
Through the guidelines, the RBI aims to ensure more choice and flexibility for customers in issuing and using credit cards, he said, adding that some agreements between card networks and issuers were limiting customers’ options. The RBI ordered the following:
- Card issuers cannot enter into agreements that prevent them from taking advantage of the services of other card networks.
- Card issuers must offer eligible customers the option to select from multiple card networks when the card is issued.
- For existing cardholders, this option will be provided at the time of your next card renewal.
What are the authorized card networks according to the directive?
The RBI directive defines the authorized card networks as: American Express Banking Corp., Diners Club International Ltd., MasterCard Asia/Pacific Pte. Ltd., National Payments Corporation of India – Rupay and Visa Worldwide Pte. Ltd. Limited.
Who is not affected by the new guidelines?
The directives do not apply to credit card issuers with less than 10 lakh active cards.
When will it come into effect?
The directive on customer choice at the time of issue will come into effect six months from the date of this circular, the RBI said.
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