Gaurav Bhalla , Sheena Khan
July 8, 2023
The Reserve Bank of India (RBI) vide its notification dated July 5, 2023 issued a draft circular requiring card issuers (both banks and non-banks) to issue cards on multiple card networks and allow customers to choose any one of the available card networks. The objective of the draft circular is to increase options for the customers (to select card networks) and in turn promote a competitive environment in the card network market.
For ease of understanding, a ‘Card Issuer’ refers to a financial institution, such as a bank or a non-bank entity, which is authorized to issue debit, credit, and prepaid cards to customers. A ‘Card Network’, on the other hand, is a financial network that facilitates electronic transactions and enables the issuance, acceptance, and processing of debit, credit, and prepaid cards. The authorized card networks in India are as follows:
Presently, the selection of a card network for cards to customers is solely determined by the card issuer. This decision is made based on the existing arrangements between the card issuers and card networks (which are established through bilateral arrangements). Upon review, the RBI has observed that the current agreements between card networks and card issuers (both banks and non-banks) do not offer adequate choices for customers. The draft circular proposes to primarily bring in force the following guidelines:
The draft circular has proposed that both card issuers and card networks be required to adhere to the new regulations from October 1, 2023. The RBI has sought inputs on the draft circular from the public until August 4, 2023.
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