‘No exclusive tie-ups with card networks’
The Reserve Bank of India (RBI) on Wednesday proposed restraining card issuers, such as banks, from entering into exclusive arrangements with card networks that forbid them from tapping rival networks. The regulator said it has found that arrangements between card networks and issuers are not “conducive to the availability of choice for customers". RBI also said card issuers should issue cards across more than one card network and provide customers with an option to choose any one among the multiple card networks.
This option, RBI said, may be exercised by customers either at the time of issue or at any subsequent time. These two directions mentioned above will be effective 1 October. These are part of a draft circular, and RBI on Wednesday sought comments from stakeholders by 4 August.
When implemented, card issuers and card networks will have to follow these for existing agreements during renewal and fresh agreements executed from the date of the circular. Card networks in India include American Express Banking Corp., Diners Club International Ltd, MasterCard Asia/ Pacific Pte. Ltd, National Payments Corporation of India-RuPay, and Visa Worldwide Pte.
Ltd. These card networks tie up with banks and non-banks to issue debit, credit, and prepaid cards. RBI said the choice of the network whose card is issued to a customer is decided by the issuer and is linked to the arrangements that issuers have with card networks.
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