Things to know about credit card portability | Fusion - WeRIndia

The Reserve Bank of India (RBI) has proposed a significant change in the way debit, credit, and prepaid cards are issued in the country.

Under the draft circular issued by the central bank, customers will now have the power to choose their desired card network or issuer instead of being limited to their issuance bank or finance companies.

This move aims to promote competition and empower customers in the Indian card market.

According to the RBI’s draft circular, card issuers like Visa, MasterCard, and RuPay will be required to issue cards across multiple card networks. Also, they have to provide customers with the option to choose any one among them.

This change will be applicable to both banks and non-banking financial companies that issue credit cards, debit cards, or prepaid cards.

Starting from October 1, credit card issuers will be obligated to offer customers the choice to select their preferred network. This means that card users will have the freedom to switch from one network to another.

Currently, Indian customers have access to five credit card networks, namely Visa, MasterCard, RuPay, American Express, and Diner’s Club. However, from October 1, they will be able to shift to any network of their choosing.

To ensure greater flexibility and competition, the RBI’s draft circular also prohibits card issuers from entering into agreements that restrict their ability to collaborate with other card networks.

The central bank emphasizes that these requirements must be adhered to in existing agreements during amendments or renewals, as well as in fresh agreements executed after the circular’s issuance.

Customers will have the option to exercise their choice at the time of card issuance or a later stage.

These changes, effective from October 1, aim to address the lack of choice for customers when banks tie up with specific card networks.

The RBI acknowledges that some banks have been compelling customers to accept particular card networks, even if they may not prefer them.

By introducing card network portability, customers will now have the freedom to select the network that best suits their needs and preferences.

The proposed guidelines from the RBI have the potential to reshape the credit card market in India.

With credit card outstanding reaching ₹2 lakh crores and a significant rise in the number of credit card holders, the introduction of customer choice in selecting card networks can inject more competition into the sector.

This move is expected to benefit both international and domestic network companies, stimulating innovation and enhancing customer experience in the Indian card market.

Overall, the RBI’s draft circular represents a pivotal step towards empowering customers and fostering a more dynamic and competitive credit card landscape in India.

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