Competition among card payment networks to intensify

financialexpress.com:

The recent norms of the Reserve Bank of India (RBI) on card payment networks may push them to offer better pricing and features to issuers, which will, in turn, benefit customers, experts said.

“The RBI norms will compel card networks to provide better features and pricing to issuers to further pass them on to customers,” says Mihir Gandhi, partner – payments transformation, PwC India. “Card networks will now have to focus on how to create a pull structure as customers may start asking for a specific brand if they see a value difference.”

Recently, the RBI issued a draft circular that forbade card issuers from entering into exclusive arrangements with specific card payment networks.

According to the norms, cards must be issued across more than one network. They will also have to provide an option to eligible customers to choose one from multiple options. The RBI has invited stakeholder comments by August 4, and expects the circular to take effect from October 1.

“Even today, every bank has tie-ups with all three networks. But, customers will now be able to choose a network depending on use-case. This will push networks to increase visibility on their product suite,” says Mandar Agashe, founder and MD, Sarvatra Technologies.

The impact of the circular will be determined by the manner in which it is implemented. But, the structure of arrangements between card issuers and networks may undergo a change if customers are given a choice, say experts.

“Card issuers may not be able to fulfil exclusive arrangements or volume share arrangements anymore. If the fight comes down to individual customer segments, you will probably see networks providing offers at the time of choosing the card itself,” says Ranadurjay Talukdar, partner