RBI issues draft circular for credit card network portability

The Reserve Bank of India on Wednesday said that it has proposed rules that could potentially restrict card issuers from engaging in exclusive agreements with card networks like Mastercard, Visa or RuPay.

The central bank also proposed that rules would be applicable to both banks and non-banking financial companies that issue credit cards, debit cards, or prepaid cards.

According to a draft circular released by the RBI dated July 5, the existing arrangements between card networks and card issuers have been deemed unfavourable in terms of providing customers with sufficient choices.

The draft circular outlines several changes, including the prohibition of exclusive relationships between card issuers and card networks.

The circular also mandates that card issuers must offer cards on more than one card network and provide customers with the option to choose between card networks at the time of issuance and subsequently.

These proposed rules aim to enhance customer choice and promote a more competitive landscape in the card network industry. The RBI has made the draft circular available on its website and has invited stakeholders to submit their comments by August 4.

The introduction of customer choice in switching between card networks could potentially boost competition among network companies.

For instance, a network like RuPay may gain an advantage by offering Unified Payments Interface (UPI) services on credit cards, which is currently not offered by other networks.

Apart from Mastercard, Visa, and RuPay, American Express and Diners Club also operate card networks in India.

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