On March 6, the Reserve Bank of India (RBI) announced that card issuers must refrain from entering into agreements with card networks that restrict them from utilizing the services of other card networks.
According to the RBI, card issuers are required to offer eligible customers the option to select from multiple card networks at the time of issuance. Existing cardholders should also be provided with this option during the next renewal cycle.
This directive follows the RBI’s observation of certain arrangements between card networks and issuers that limit customer choice.
The RBI has listed authorized card networks, including American Express Banking Corp, Diners Club International Ltd, MasterCard Asia/Pacific Pte Ltd, National Payments Corporation of India–Rupay, and Visa Worldwide Pte Limited.
To ensure compliance, card issuers and networks must incorporate these new rules into existing agreements during amendment or renewal. However, the RBI clarified that these directives do not apply to credit card issuers with fewer than 10 lakh active cards or those who issue credit cards on their own authorized card network.
Typically, authorized card networks collaborate with banks and non-banks for credit card issuance. The choice of network for a card is determined by the issuer based on their bilateral agreements with card networks.
