The Reserve Bank of India (RBI) has unveiled fresh guidelines to enhance the quality of credit card services accessible to consumers. These directives from the central bank pertain to the collaboration between authorized card networks and both banks and non-banking entities for the issuance of credit cards.
This initiative stems from the RBI's scrutiny of specific arrangements between card networks and issuers, which have been noted to limit the choices available to customers.
"After a thorough review, it has been observed that certain arrangements between card networks and card issuers do not foster an environment conducive to offering customers a diverse array of choices," stated the RBI.
In response to this concern, the RBI has mandated that card issuers abstain from entering into agreements that impose limitations on their ability to utilize the services provided by alternative card networks.
"Card issuers are instructed not to engage in any arrangement or contract with card networks that restrict them from availing themselves of the services offered by other card networks," clarified the RBI.
Additionally, the RBI has instructed card issuers to afford eligible customers the opportunity to select from multiple card networks when obtaining a credit card.
"At the time of issuance, card issuers are obligated to present eligible customers with the option to choose from a variety of card networks. As for existing cardholders, this choice may be presented during the subsequent renewal process," elaborated the central bank.
This choice can be exercised by existing cardholders during the upcoming renewal cycle.
The roster of authorized card networks encompasses American Express, Diners Club, MasterCard, National Payments Corporation of India (RuPay), and Visa.
Both card issuers and card networks must adhere to these directives not only in existing agreements but also during modifications or renewals, as well as in fresh agreements, as stipulated by the RBI.
However, it's important to note that the provision granting customers the option to select card networks will not apply to card issuers with fewer than 10 lakh active cards. This provision will take effect six months from the date of issuance of the circular.
Furthermore, the RBI has excluded card issuers that independently issue credit cards on their own authorized card network from the purview of this circular.
