By October 1, banks will offer customers the option to select from multiple card networks like Visa, MasterCard, and Rupay for their debit, credit, and prepaid cards.
On July 5 the Reserve Bank of India released a draft circular on changing the arrangement between card networks and banks and non-bank entities authorised to issue cards.
According to the notification, cards must be issued across more than one network and the issuers must provide their customers with the option to choose from them.
The option can be exercised at the time of the issuance of the card or at any other time. Effective October 1, these orders were stated to be effective.
The RBI also recommended that card issuers not engage in any arrangement or agreement with card networks that restrained them from taking the service of other card networks, thereby preventing banks from entering exclusive contracts with networks.
Axis Bank's president and head, Sanjeev Moghe, said the private sector lender was live on Visa, MasterCard and Rupay since the first quarter of this financial year. The impact from a revenue perspective, he said, would be minimal, if any.
Banks will have to invest in tech and partnerships to make the options available to customers, according to analysts. This will assist in developing systems and upgrading existing infrastructure.
Shetty said the decision was made by the Supreme Court and was made in response to a request by the prime minister.
Some senior bank officials said they had sought clarification from the regulatory authorities if this applied to co-branded cards. They are still unrehearsed by the Federal Trade Commission on the matter.
While most banks offer all the networks to their customers, only one specific network is available for co-branded cards.
The RBI's circular made it applicable to both existing and fresh agreements between card issuers and network service providers.
The move would be beneficial to customers because it would give them more control over their financial decisions and make it more competitive for digital network service providers.
Shetty also added: 'It's a good thing,' adding: 'It's a good thing that we're getting to know how we're going to be in the future,' he added.