RBI Update – RBI Empowers Cardholders to Choose Their Preferred Network
The Reserve Bank of India (RBI) has taken a significant step by introducing a draft circular that allows debit, credit, and prepaid card users to select their preferred card network.
This move challenges the current practice of predetermined card network options and aims to provide more choice and flexibility to customers.
According to the draft circular, card issuers would be prohibited from entering into agreements or arrangements that restrict them from availing of the services of other card networks.
The RBI has observed that the existing arrangements between card networks and issuers limit the availability of choice for customers.
Under the proposed rule, card issuers must provide eligible customers with the option to choose any one among multiple card networks.
Customers can exercise this option either at the time of card issuance or at a later stage.
This initiative aims to empower consumers and enhance competition among credit card networks.
Card network portability is a key aspect of this proposal.
Similar to how we can switch mobile service providers while retaining the same phone number, card network portability allows cardholders to maintain their existing card accounts, balances, and credit history while switching to a different payment network.
This flexibility empowers consumers to choose the network that best aligns with their needs, be it based on rewards programs, acceptance, or customer service.
Amit Gupta, Managing Director of SAG Infotech, highlighted that this new rule gives consumers more control over their financial choices and promotes healthy competition among credit card networks.
Stakeholders are encouraged to provide their feedback on the draft circular to the RBI until August 4.
This feedback will be valuable in shaping the final guidelines and ensuring that the new rules effectively serve the interests of cardholders and promote a more dynamic and customer-centric payment ecosystem.
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