In its preliminary circular, the Reserve Bank of India has instructed card issuers not to enter into any agreements or arrangements with card networks that restrict their ability to access card network services. The circular also requires card issuers to provide eligible customers with the option to select any one of multiple card networks. According to the RBI draft circular, this choice can be exercised at the time of card issuance or at a later stage.
The RBI draft circular further states that both card issuers and card networks must adhere to these requirements in existing agreements when they are amended, renewed, or newly executed from the date of the circular.
This rule poses a challenge to the existing practice of agreements between card issuers and networks, thereby facilitating card network portability. Amit Gupta, Managing Director of SAG Infotech, explains this concept, noting that credit card network portability refers to the ability of consumers to transfer their credit card accounts from one network to another. Similar to switching mobile service providers while retaining the same phone number, credit card network portability allows cardholders to maintain their existing credit card accounts, balances, and credit history while switching to a different payment network.
Amit Gupta highlights the benefits of this approach, stating that it empowers customers to choose the card network that best suits their needs, whether based on factors such as rewards programs, acceptance, or customer service. It also promotes competition among credit card networks and provides customers with greater control over their financial choices. However, Amit Gupta cautions that not all credit card issuers or networks may support portability, and there may be specific terms and conditions associated with the transfer process. Therefore, individuals considering credit card network portability should carefully research and evaluate their options before making any decisions, according to Amit Gupta.
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