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RBI’s Directive: Customers Gain Freedom to Choose Credit Card Payment Networks

RBI’s New Guidelines Empower Consumers with Multiple Card Network Options

New Delhi: In a significant development, the Reserve Bank of India (RBI) has mandated banks to offer customers the flexibility to select from multiple card networks when obtaining credit cards. Henceforth, both banks and non-banking entities issuing credit cards are obliged to provide consumers with the choice of various card networks at the time of card issuance. RBI’s directive prohibits agreements that restrict customers from accessing services of other card networks, thereby ensuring greater freedom of choice. The authorized card networks enlisted by RBI include American Express Banking Corp, Diners Club International Ltd, MasterCard Asia/Pacific Pte, National Payments Corporation of India-Rupay, and Visa Worldwide Pte. These guidelines aim to enhance options for customers in credit card issuance and usage, addressing limitations imposed by certain agreements between card networks and issuers.

RBI’s Directive:

Under the new guidelines, card issuers are barred from entering agreements preventing customers from utilizing services of other card networks. Eligible customers must be given the choice of selecting from multiple card networks during card issuance, with existing cardholders also provided this option upon card renewal.

Reason behind the Initiative:

RBI’s action follows scrutiny of arrangements between card networks and issuers, which were found to restrict customers’ choice of card networks. However, the rules exempt credit card issuers with an active card issuance of Rs 10 lakh or less. Similarly, issuers operating their own authorized card networks are not subject to these guidelines. RBI had released a draft circular on this matter in July 2023.

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