Credit Card Rules: This initiative has been taken after the Reserve Bank of India introduced guidelines to improve customer experience and promote competition in the digital payments landscape. Earlier, banks and non-banking card issuers used to partner with the same card network for credit cards, which limited the options for customers to choose their preferred card network.
Credit Card Rules: From today i.e. September 6, 2024, credit card holders will get the freedom to choose their card network. From now on, 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 is, you can transfer from Visa to MasterCards while renewing the card.
This will be the benefit
This initiative has been taken after the Reserve Bank of India introduced guidelines to improve customer experience and promote competition in the digital payments landscape. Earlier, banks and non-banking card issuers used to partner with the same card network for credit cards, which limited the options for customers to choose their preferred card network.
In an order dated March 6, RBI implemented rules prohibiting exclusive arrangements between card issuers and networks. This new order gives customers the freedom to choose their preferred card network. RBI emphasized in its circular that it is mandatory for card issuers to give eligible customers the option to choose their preferred card network at the time of obtaining a new card or at any time thereafter.
What did RBI say?
RBI had said in its draft circular that card issuers will provide their eligible customers the option to choose one of several card networks. Customers 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 10 lakh or less active cards. This circular specifically excludes card issuers who distribute credit cards using their own authorized card network.
These 5 companies provide card service
Card networks, also known as payment networks, play a vital role in issuing and processing 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 smooth and secure payments.
There are five registered card networks in India that operate within the payment 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.
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Why did 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. These guidelines aim to encourage competition among various card networks. Earlier banks were responsible for choosing the card network assigned to customers. However, this has changed, with customers now having the freedom to choose their preferred network based on their individual needs and preferences.
An exception has been made to the RBI requirements for American Express, which operates its own independent network. American Express is not required to follow the guidelines imposed by the RBI. Various 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 several benefits to cardholders. These benefits include wider acceptance of the card, access to exclusive offers, and increased convenience in making transactions.
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