Banks must give customers choice to select credit card network: RBI

The Reserve Bank of India (RBI) on Wednesday asked banks and non-banking financial companies (NBFCs) to give customers the option to choose from multiple networks when they issue credit cards.

The regulator’s directive will be effective from September 6, six months later. Existing cardholders may be given the option at the time of their next renewal, the RBI said in a communication to banks, NBFCs, and payment system providers.

RBI said it found in a review that some arrangements between card networks and issuers are “not conducive to the availability of choice for customers”. It prohibited card issuers and networks from making any arrangement or agreement that restrains customers from availing the services of other card networks. The network for a card issued to a customer is currently decided by the card issuer – based on bilateral agreements.

The regulator’s directive will not be applicable to credit card issuers whose tally of active cards is one million or less. Card issuers with their own authorised network are excluded too.

Authorised card networks in India include MasterCard, Visa, National Payments Corporation of India for RuPay, American Express, and Diners Club.

Credit cards are growing in India, with the total number inching towards the 100 million mark. There were 97.9 million outstanding credit cards As of December 2023, with a record addition of 1.9 million in that month, according to data from the RBI. Calendar year 2023 witnessed the addition of 16.71 million cards, a significant increase from the 12.24 million added in 2022.

This trend of growth has been consistent over the past five years, with the number of credit cards in circulation swelling by nearly 77 per cent from 55.53 million in December 2019. This uptick is driven by a combination of sustained push from banks and evolving consumer spending patterns.