From 6 September, both banks and non-banking financial institutions issuing credit cards must offer customers the option to select from multiple card networks, including RuPay, Amex, Mastercard, Visa and Diners Club at the time of issuance or renewal.
The Reserve Bank of India on Wednesday issued guidelines aimed at simplifying the process for customers to select credit cards. The central bank has barred card issuers from entering into any arrangement with card networks which restrains them from availing services of other card networks.The central bank also said that card issuers need to provide an option to their eligible customers to choose from multiple card networks at the time of issue. This flexibility extends to existing cardholders, who can opt to switch networks during the renewal process. However, these regulations only apply to credit card issuers with more than 10 lakh cards, and it also excludes those issuers operating on their own authorized card network.
How does it help consumers?
For example: A customer who is applying for a new credit card can now choose which network they want to use, such as Visa or Mastercard, rather than being restricted to using the network the issuer prefers. “This means they can choose a network that may have better rewards or benefits that suit their needs. Similarly, if a customer’s current credit card is up for renewal, they can now switch to a different network that better suits their needs. If they have been using a Visa card but have found that new rewards are offered with the Amex network, they can switch to an Amex card during renewal,” explained Adhil Shetty, CEO of Bankbazaar.
RBI’s new mandate would necessitate banks to enter into partnerships with more payment networks to offer consumers the choice.
“At the consumer level, this would largely help those who have a preference for the Rupay Network, to avail the additional benefits of seamless digital payments by linking their cards to UPI. The RBI directive would also allow network portability at the time of card renewal, allowing consumers to switch to their preferred network without having to apply for a new card,” said Rohit Chhibbar, Head of Credit Cards Business, Paisabazaar.
The new guidelines are set to be effective from September 6 and are designed to offer customers enhanced flexibility and options in choosing credit card networks.
Also Read : Indian women excel in punctual loan repayments compared to men, shows study
As of January 2024, there were 13 card-issuing banks with more than 10 lakh cards and 22 banks with less than that. But significantly, those 13 banks account for 92 per cent for all cards, and the top four alone accounted for 70 per cent.
The directive, mandating customer choice during issuance, is set to come into effect six months from now, which is September 6.
What happens currently?
The authorised card networks tie-up with banks / non-banks for the issuance of credit cards. The choice of 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.
Why does RBI want this changed?
” On a review, it is observed that some arrangements existing between card networks and card issuers are not conducive to the availability of choice for customers,” the central bank said in a statement. This is why it has directed card issuers to not enter into any arrangement or agreement with card networks that restrain users from availing of the services of other card networks.
What is the RBI diktak?
Card issuers will have to provide an option to their eligible customers to choose from multiple card networks at the time of issue. For existing cardholders, this option may be provided at the time of the next renewal.Authorised card networks as per RBI are: American Express Banking Corp., Diners Club International Ltd., MasterCard Asia/ Pacific Pte. Ltd., National Payments Corporation of India–Rupay, and Visa Worldwide Pte. Limited.Who is eligible?
The directives do not apply to credit card issuers with fewer than 10 lakh active cards.Impact
“By allowing customers to choose from multiple card networks, the RBI will usher in a new era of dynamic competition, which will benefit the entire ecosystem tremendously. ..Imagine a scenario where a small business owner wants to prioritize lower transaction fees for everyday purchases. Previously, his bank’s network might have imposed a higher cost. With the new directive, the business owner will be able to choose a network known for competitive fees, potentially saving him significant money annually. Furthermore, the directive will compel networks to innovate and offer more tailor-made solutions to a diverse customer segment. We might be able to see more co-branded cards emerging for specific demographics or professions,” said Raksh*t Agarwal, co-founder, Rupicard.
FAQs
From 6 September, both banks and non-banking financial institutions issuing credit cards must offer customers the option to select from multiple card networks, including RuPay, Amex, Mastercard, Visa and Diners Club at the time of issuance or renewal.
What are the 4 credit card networks? ›
The four major credit card networks are Mastercard, Visa, American Express and Discover.
Which credit card network is best? ›
The most widely used card payment system worldwide is Visa. It offers credit cards as well as debit cards. While Visa enables card-based electronic fund transfers, it does not issue cards or set the terms and conditions or fees.
Why would a business want to establish its own private credit card system? ›
The private label credit program allows retailers to offer more lenient and extended terms to customers than they could otherwise. Many stores offer private label credit cards to their customers to encourage them to spend more by offering the convenience of a credit card and deferred payment.
What is the most used credit card network? ›
While Visa and Mastercard have long been the most widely accepted credit card networks worldwide, American Express and Discover have been working on expanding their footprints in the U.S. and abroad.
What is a credit card network? ›
Credit card networks create virtual payment infrastructures in which merchants can receive their payments. Networks then charge the merchant an interchange fee (or swipe fee) for processing a consumer transaction. The four major credit card networks are Visa, Mastercard, American Express and Discover.
What are the different card networks? ›
Card networks work silently in the background when you swipe or tap your card to make a payment. There are currently five authorised card networks in India—RuPay, Visa, MasterCard, American Express, and Diners Club.
What is an example of a card network? ›
A card network (sometimes called a card association) is an organization that facilitates payment card transactions. It regulates who, where, and how cards are used. Examples of card networks include Visa®, Mastercard®, American Express®, Discover®, China UnionPay®, and JCB®.
How many different credit card networks are there? ›
The four major credit card networks in the U.S. are Visa, Mastercard, Discover and American Express.
What card network does Chase use? ›
Chase cards are credit cards and debit cards on the Visa or Mastercard network. For example, the Chase Sapphire Preferred® Card is a Visa card for people with good credit that offers 1 - 5 points per $1 on purchases.
Retailers are so invested in turning customers into private-label cardholders, that they often offer their sales clerks cash incentives for signing people up. One big reason that retailers like store credit cards is that they encourage customers to spend more.
Is it illegal to get a business credit card for personal use? ›
There's no law that prohibits using a business credit card for personal use. The same is true for using a consumer card for business expenses. Most issuers do specify in the terms and conditions that business cards should only be used for business purposes.
Is it illegal to use your business credit card for personal use? ›
Putting your personal purchases on your business credit card technically isn't illegal.
What is the #1 credit card to have? ›
The best credit card overall is the Wells Fargo Active Cash® Card because it gives 2% cash rewards on all purchases and has a $0 annual fee. For comparison purposes, the average cash rewards card in 2024 gives about 1% back.
What network does Capital One use? ›
The Capital One Venture Rewards Credit Card and the Capital One Venture X Rewards Credit Card are both Visa cards, whereas most other Capital One credit cards operate on the Mastercard network.
What is the difference between a credit card company and a credit card network? ›
Credit Card Network vs. Credit Card Company Issuers. Credit card issuers are companies that provide credit cards. Credit card networks create the infrastructure that makes transactions possible.
What are the five card payment networks? ›
There are five authorised card networks in India: Visa, Mastercard, RuPay, Diners Club, and American Express.
What are the 3 main credit card agencies? ›
There are three main credit bureaus: Experian, Equifax and TransUnion. Below, CNBC Select reviews common questions about the credit bureaus so you can be more informed when applying for a new card.
What is the first 4 of a credit card? ›
What do the first four digits of a credit card mean? The first four digits are part of the BIN or IIN, a six-digit number that identifies the card issuer. These numbers contain valuable information about a credit card. The first digit of a credit card specifies the card's payment network and industry.
What are the four most common credit cards? ›
Of the four main types of credit cards—Visa, Mastercard, American Express and Discover—Visa is by far the most common, making up 58.3% of cards in circulation.
