RBI draft says banks can't get into exclusive tie up with card issuers

economictimes.indiatimes.com:

RBI) is proposing that banks and card network providers like MasterCard, VISA and American Express cannot get into exclusive arrangements that curbs competition and puts the consumer at a disadvantage.Card issuer banks will henceforth have to issue cards from more than one network provider and will have to provide an option to customers to choose any one among the multiple card networks, RBI said in a draft circular. In the draft circular RBI said that existing arrangements between card networks and card issuers (banks and non-banks) are not conducive to the availability of choice for customers. It has called for public comments by August 4 and set October 1 as the date to implement the circular.

If implemented, customers can choose their card provider either at the time of issue or any other subsequent time. Card issuer banks can no longer get into an exclusive arrangements with card networks. All new card agreements will compulsorily have to be rejiged when this circular is implemented.

Existing card agreements will also have go be amended at the time of renewal. RBI's stated objective has been to keep the payment system affordable while also ensuring that no one company dominates retail payments. The sucess of the National Payment Corp of India (NPCI) particularly with regards to the Immediate Payment Service (IMPS) and Unified Payments Interface (UPI) has helped keep charges down while providing more options to customers.