Starting today, September 6, 2024, credit card holders have the freedom to select their preferred card network.
Users can now choose from available networks like Visa, MasterCard, or Rupay when applying for a new card or renewing an existing one.
For example, if you have a Visa card, you can switch to MasterCard upon renewal.
Benefits of This Change
This move follows new guidelines from the Reserve Bank of India (RBI) to enhance customer experience and increase competition in digital payments.
Previously, banks and card issuers partnered with only one card network, limiting choices for customers.
On March 6, 2024, RBI issued an order prohibiting exclusive deals between card issuers and networks.
This order now allows customers to select their preferred network when obtaining a new card or at any point thereafter.
However, this rule does not apply to card issuers with 10 lakh or fewer active cards, or those using their own authorized network.
What Did RBI Say?
In its draft circular, RBI emphasized that card issuers must provide eligible customers the option to choose their card network.
This option can be exercised either when the card is issued or later. American Express, which operates on its own independent network, is exempt from this guideline.
Several banks, including Bank of Baroda and Yes Bank, have already implemented these guidelines.
Selecting a specific card network can offer various advantages like better acceptance, exclusive offers, and easier transactions.
Five Major Card Networks in India
Card networks play an essential role in processing payments for credit, debit, and prepaid cards.
They act as the infrastructure that enables secure transactions between merchants, cardholders, and issuers.
India has five main registered card networks: American Express, Diners Club International, MasterCard, National Payments Corporation of India (RuPay), and Visa.
These networks are crucial in supporting digital transactions and expanding electronic payments throughout the country.
Why RBI Took This Step
The RBI’s decision aims to create a more competitive environment in the credit card industry.
Earlier, banks chose the card network for customers, but now customers have the freedom to select a network that best meets their needs and preferences.
This initiative is part of the RBI’s broader efforts to enhance customer choice, improve services, and foster innovation in the digital payment ecosystem.
