The Reserve Bank of India has rolled out a circular stating news rules for issuance of debit, credit and prepaid cards directing that card issuers shall issue cards across more than one card network and also give an option to customers to choose from any one among the multiple card networks.
The central bank, in its circular, further said the existing arrangements between card networks and card issuers i.e. banks and non-banks, are not conducive for customers.
ALSO READ: Jio Financial Services IPO: All You Need To Know About Share Price, Listing Date And Other Details
According to a draft circular by RBI, card issuers would be prohibited from entering into any arrangement or agreement with card networks that restrain them from availing the services of other card networks.
"Card issuers shall 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," the draft circular read.
What does card network portability mean?
Card network portability is changing or transferring of card accounts from one network to another. In this rule, the consumer can switch its existing card network to another without changing its account number, credit history and balance. This is very similar to a mobile phone service network portability where we can switch to another telecom company without changing our existing phone number and mobile phone.
The central bank has also sought stakeholders comments on the draft circular by August 4 this year.
“This flexibility empowers consumers to choose the network that best suits their needs, whether it's based on factors like rewards programs, acceptance, or customer service. It enhances competition among credit card networks and gives consumers more control over their financial choices," Amit Gupta, MD, SAG Infotech, was quoted as saying by Livemint.
ALSO READ: How This NIFT Graduate Built A Multi-Million Dollar Company In Just 4 Years
Customers are the real beneficiaries of this new draft proposal by the central bank as the card issuer will have to provide more than one card network and offer the option to choose at the time of issuance or subsequently.
The larger benefit to customers other than innovative offers by different network providers is something to check out in the future," Rajalakshmi Raghu, Head - Strategic Relationships, Manipal Technologies Limited, was quoted as saying by Livemint.