What changed
RBI has directed that card issuers cannot enter agreements that restrict them from using other card networks. They must offer eligible customers a choice of multiple card networks at the time of card issuance, and for existing cardholders, at the next renewal. This applies to all authorised card networks including American Express, Diners Club, MasterCard, RuPay, and Visa.
What it means for you
Banks and non-bank issuers must renegotiate existing bilateral agreements with card networks to remove exclusivity clauses. This enhances customer choice and competition, potentially lowering costs for lenders. Small issuers with ≤10 lakh active cards are exempt from the choice mandate, but all must comply with the ban on restrictive agreements.
What you must do
- Review all existing card network agreements and remove any exclusivity or restrictive clauses by the next amendment or renewal.
- Update card issuance and renewal processes to offer eligible customers a choice of at least two card networks.
- Ensure systems are ready to implement the multi-network choice option for new cards immediately and for renewals within six months (by September 6, 2024).
- If your institution has ≤10 lakh active credit cards, confirm exemption eligibility but still comply with the ban on restrictive agreements.
Who it affects
All banks issuing credit cards, Non-bank credit card issuers, Authorised card networks (American Express, Diners Club, MasterCard, RuPay, Visa), Payment system providers and participants
Does this circular apply to debit cards or only credit cards?
The circular specifically addresses credit cards. It does not mention debit or prepaid cards, so the requirements apply only to credit card issuance.
Are small banks with fewer than 10 lakh credit cards exempt from everything?
No. They are exempt only from the requirement to offer a choice of multiple networks (para 3(b)). They must still comply with the ban on restrictive agreements that prevent using other card networks.
When must we start offering the multi-network choice to existing cardholders?
For existing cardholders, the option must be provided at the time of the next renewal. The overall mandate becomes effective six months from March 6, 2024, i.e., by September 6, 2024.