Card issuer banks will henceforth have to issue cards from more than one network provider and will have to provide an option to customers to choose any one among the multiple card networks, RBI said in a draft circular.
The central bank said that existing arrangements between card networks and card issuers (banks and non-banks) are not conducive to the availability of choice for customers. It has called for public comments by August 4 and set October 1 as the date to implement the circular. If implemented, customers can choose their card provider either at the time of issue or any other subsequent time.
Card issuer banks can no longer get into exclusive arrangements with card networks.
All new card agreements will compulsorily have to be rejigged when this circular is implemented. Existing card agreements will also have to be amended at the time of renewal.
RBI’s stated objective has been to keep the payment system affordable while also ensuring that no one company dominates retail payments.
The success of the National Payments Corporation of India (NPCI) particularly with regard to the Immediate Payment Service (IMPS) and Unified Payments Interface (UPI) has helped keep charges down while providing more options to customers.
Last August the RBI released a discussion paper on payment systems where it said that charges for payment services should be reasonable and competitively determined for users while also providing an optimal revenue stream for the intermediaries.
The government and RBI have so far not allowed any merchant discount rates (MDR) charges on the NPCI-promoted RuPay debit card despite protests by some banks and foreign card issuers who argue that it leaves merchants and issuers with no incentives to invest in deepening the card network.
In the discussion paper, RBI sought feedback on whether debit card transactions should be charged as normal funds transfer transactions. Or, whether MDR for debit cards should be uniform across merchants.
