In a significant move to enhance customer choice and promote healthy competition, the Reserve Bank of India (RBI) has issued new guidelines for credit card issuers. The directives explicitly state that card issuers are prohibited from entering into agreements that restrict them from availing services from other card networks.
Key Highlights of the RBI’s Directive:
- No Restrictive Agreements: Card issuers are explicitly barred from engaging in any agreements or arrangements that limit their access to services from other card networks. This aims to eliminate exclusivity clauses that hinder competition.
- Customer Choice: The central bank emphasizes that card issuers must provide eligible customers with the option to choose from multiple card networks during the card issuance process. For existing cardholders, this choice should be offered at the time of the next card renewal.
- Authorized Card Networks: The RBI has specified a list of authorized card networks, including American Express Banking Corp., Diners Club International Ltd., MasterCard Asia/Pacific Pte. Ltd., National Payments Corporation of India–Rupay, and Visa Worldwide Pte. Limited.
- Exclusions: The guidelines exempt credit card issuers with fewer than 10 lakh active cards from the specified directives.
- Implementation Deadline: The directive pertaining to customer choice during card issuance will come into effect six months from the date of the circular, allowing issuers time for compliance.
The move is aimed at addressing observed arrangements between card networks and issuers that restricted customer options. By ensuring that customers have the flexibility to choose from multiple card networks, the RBI seeks to foster a more customer-centric approach within the credit card industry. The guidelines aim to introduce healthy competition, drive innovation, and enhance overall customer experience in the credit card market.
