credit card
From today i.e. from 6th September 2024, credit card holders will have the freedom to choose their card network. From now onwards, credit card users can choose the card network of their choice from the available card networks Visa, MasterCard, RuPay while applying for a new credit card or renewing an existing card. That means you can transfer from Visa to MasterCard while renewing the card.
This will be beneficial
This move comes after the Reserve Bank of India introduced guidelines to improve customer experience and promote competition in the digital payments landscape. Earlier, banks and non-bank card issuers used to partner with a single credit card network, limiting the options for customers to choose their preferred card network.
In an order dated March 6, the RBI imposed rules prohibiting special arrangements between card issuers and networks. This new order gives customers the freedom to choose the card network of their choice. The RBI in its circular stressed that it is mandatory for card issuers to provide eligible customers with the option to choose their preferred card network at the time of getting the new card or at any time thereafter.
What did the RBI say?
The RBI had said in its draft circular that card issuers will provide their eligible customers with the option to choose from multiple card networks. The customer can exercise this option at the time of issuance or at any time thereafter. The above condition does not apply to credit card issuers with active cards of Rs 10 lakh or less. This circular specifically excludes card issuers distributing credit cards using their own authorised card networks.
These 5 companies provide card service
Card networks, also known as payment networks, play a vital role in the issuance and processing of card-based products such as credit cards, debit cards, and prepaid cards. These networks serve as an infrastructure that facilitates transactions between merchants, cardholders, and card issuers, ensuring secure and seamless payments.
There are five registered card networks in India operating within the payments ecosystem. These include American Express Banking Corp, Diners Club International Ltd, Mastercard Asia/Pacific Pte Ltd, National Payments Corporation of India-Rupay and Visa Worldwide Pte. These networks play a vital role in enabling electronic transactions and promoting digital payments across the country.
Why did the RBI take this decision?
The Reserve Bank of India (RBI) has introduced guidelines aimed at promoting a more democratic environment in the credit card market. The aim of these guidelines is to encourage competition between different card networks. Previously, banks were responsible for choosing the card network allocated to customers. However, this has changed, giving customers the freedom to choose their preferred network based on their individual needs and preferences.
An exception to the RBI requirements has been made for American Express, which operates its own independent network. American Express is not required to follow the guidelines imposed by the RBI. Several banks such as Bank of Baroda and Yes Bank have already implemented the new guidelines set by the RBI. These banks have taken steps to comply with the updated rules. Choosing a particular card network can provide many benefits to cardholders. These benefits include wide acceptance of the card, access to special offers, and added convenience while making transactions.
