The current policy challenges the current practise in which card network selections are defined by agreements between issuers and networks.
New Delhi: Have you ever noticed that whenever you apply for a debit or credit card, it always has either Visa, Mastercard, or the newly launched RuPay written over it? But did you ever made a decision to choose any one of these? No right? This is because your bank has been choosing your card network provider for you all these years, but that’s less likely to happen now. The current policy challenges the current practice in which card network selections are defined by agreements between issuers and networks, as per a report in the Mint.
In a draft circular, the central bank encouraged card issuers (banks and financial businesses) to allow their customers to have more than one card choice and to let them choose their preferred network provider for their cards.
Current Situation For Debit and Credit Cards
When applying for a debit or credit card, you normally do not have the choice of selecting a card network. Typically, your bank has an exclusive agreement with one or more card networks, such as Visa, Mastercard, or RuPay. As a result, banks only issue cards through their preferred network.
Current Card Networks in India
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There are now five card networks in India. a) American Express Banking Corp., b) Diners Club International Ltd., c) MasterCard Asia/Pacific Pte. Ltd., d) National Payments Corporation of India (RuPay), and e) Visa International Inc., as per a report in the Economic Times.
What Does The RBI draught circular say?
The draftt RBI circular says, “The authorised card networks tie up with banks and non-banks for the issuance of debit, credit, and prepaid cards. The choice of affiliated network for a card issued to a customer is decided by the card issuer and is linked to the arrangements that the card issuers have with card networks in terms of their bilateral agreements. On a review, it is observed that arrangements existing between card networks and card issuers (banks and non-banks) are not conducive to the availability of choice for customers.”
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What is Card Network Portability?
The ability of users to transfer their card accounts from one network to another is referred to as card network portability. Card network portability allows cardholders to keep their existing card accounts, balances, and credit history while switching to a different payment network, similar to how we can transfer mobile service providers while keeping the same phone number, the report in Mint added.
