The Reserve Bank of India (“RBI”) has published on its website draft circular on Arrangements with Card Networks for issue of Debit, Credit and Prepaid Cards (“Draft Circular”) which mandates card issuers (banks / non-banks) to issue cards on more than one card-network along with providing customers the facility to choose any one among the multiple card networks. It also restrains card issuers from entering into agreements that limit their ability to tie-up with other card-networks.
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Background:
The authorised card networks tie-up with banks / non-banks for issuance of debit / credit / 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.
In light of this, RBI has proposed to issue the following directions through the Draft Circular:
- Card issuers should not enter into any arrangement or agreement with card networks that restrain them from availing the services of other card networks.
- Card issuers should issue cards across more than one card network.
- Card issuers should provide an option to their eligible customers to choose any one among the multiple card networks. This option may be exercised by customers either at the time of issue or at any subsequent time.
- Card issuers and card networks have to ensure to adhere to the above requirements in
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- existing agreements at the time of amendment or renewal thereof, and
- fresh agreements executed from the date of this circular
Source: Reserve Bank of India
