On July 5, the Reserve Bank of India (RBI) released a preliminary circular regarding the issuance of debit, credit, and prepaid cards. The circular emphasized the need for card issuers to offer cards through multiple card networks, providing customers with the freedom to select their preferred network.
The RBI expressed concerns about the current arrangements between card networks and issuers, whether they be banks or non-banking institutions, as they are not advantageous for customers. To rectify this, the central bank stated that card issuers should not engage in any agreements or arrangements that restrict them from utilizing the services of other card networks.
Additionally, the RBI stressed the importance of card issuers and networks adhering to existing agreements during the process of amendment or renewal. To gather feedback and opinions on the draft circular, the RBI has invited comments from stakeholders, which should be submitted by August 4.
Highlights
#1) Card issuers are prohibited from entering into any agreements that restrain them from availing the services of other card networks.
#2) Card issuers must issue cards across more than one card network, providing customers with a wider range of options so that they can choose a network that best suits them.
#3) Card issuers must offer eligible customers the freedom to select any one card network from multiple options. This choice can be made at the time of card issuance or at a later stage, depending on the customer needs.
#4) Both card issuers and card networks are expected to comply with the new requirements set forth by the RBI which will be effective from October 1, 2023. This allows the concerned parties a transition period to align their operations with the new regulations that aim to create a more competitive and customer-centric environment.