From October 2023, banks will provide customers with the option to choose from multiple card networks like Visa, MasterCard and Rupay for their debit, credit and prepaid cards.
According to the notification, card issuers must issue cards across multiple networks and provide their customers with the option to choose from them. The customers can exercise the option at the time of issuance or at any other time. These directives were said to be effective from October 1st, 2023.
The RBI also said that the card issuers should not enter into any arrangement or agreement with card networks that restrain them from availing the services of other card networks, thereby barring banks from entering exclusive contracts with networks.
Sanjeev Moghe, president & head cards and payments, Axis Bank, said the private sector lender is already live on Visa, MasterCard, and Rupay since the first quarter of the current financial year. The impact on the bank from a revenue perspective due to the RBI norms would be minimal, if any, he said.
Banks will have to invest in tech and partnerships to make the options available to customers, which will help in creating new systems and upgrading the existing infrastructure, according to analysts.
Shetty, who has vowed not to speak on condition of anonymity, said it was the first time she had spoken to a foreign minister.
Some senior banking officials said they have sought clarification from the regulator if this is also applicable for co-branded cards. The banks have yet to hear from the regulatory authority on this matter.
While most banks offer all networks to their customers, for co-branded cards, only one network is offered.
The circular made it applicable both to existing and new agreements between card issuers and network service providers.
Analysts said the move would be beneficial for customers, as it will give them more control over their financial decisions and make it more competitive for the digital network service providers.
Shetty added that the prime minister's remarks were a reflection of the public's skepticism.