In order to enhance consumer choice and competition in the credit card market, the Reserve Bank of India (RBI) has issued a directive. On Wednesday, the RBI mandated that card issuers must offer their eligible customers the choice of multiple card networks when issuing or renewing cards.
According to a press release issued by the central bank, card issuers cannot enter into agreements restricting their access to other card networks with card networks.
Concerns have been raised about restrictive practices in the credit card industry as a result of the directive.
According to the RBI, arrangements between card issuers and card networks that limit customer choice are detrimental to the availability of options.
The RBI aims to create a more dynamic and inclusive financial ecosystem through consumer choice and fair competition.
Card issuers must offer eligible customers the option of choosing from multiple card networks when issuing or renewing credit cards under the RBI directive.
Providing more control and flexibility to the consumer over their financial products is the goal of this provision.
Furthermore, the RBI prohibits card issuers from entering into agreements with card networks that prevent them from using other card networks.
Authorized card networks include American Express Banking Corp., Diners Club International Ltd., MasterCard Asia/Pacific Pte. Ltd., National Payments Corporation of India-Rupay, and Visa Worldwide Pte. Ltd.
Also included in the exemptions are credit card issuers with a customer base of fewer than 10 lakh active cards.
From the date of issuance of the circular, the directive will take six months to implement, giving card issuers and networks ample time to prepare.
As part of its directive, RBI affirms its commitment to protecting consumers’ interests and promoting a competitive and resilient financial system.
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