Visa or MasterCard? From tomorrow, you can choose your credit card network

Starting September 6, credit cardholders in India will have the flexibility to choose their preferred card network (Mastercard, RuPay, or Visa) when applying for a new credit card or renewing an existing one. This change is a result of the Reserve Bank of India's (RBI) guidelines aimed at enhancing customer experience and promoting competition in the digital payments landscape.

When you apply for a debit card or credit card, you usually do not get an option to choose the card network. Your bank typically has an exclusive arrangement with any of the card networks such as Visa, Mastercard or RuPay, etc. So, the banks issue cards on their preferred network. "Card issuers shall provide an option to their eligible customers to choose any one among the multiple card networks. This option may be exercised by customers either at the time of issue or at any subsequent time," RBI had stated in its draft circular.

Note that above does not apply to credit card issuers with 10 lakh or less active cards. The circular does not apply to card issuers that issue credit cards through their own approved card network.

Key Points:

• Customer Choice: Previously, banks determined the card network. Now, customers have the freedom to select their preferred network based on their needs and preferences.
• RBI's Initiative: The RBI's guidelines aim to democratize the credit card market and drive competition among networks.
• Exemption for American Express: American Express, which operates its own network, is exempt from the RBI's requirements.
• Implementation: Several banks, including Bank of Baroda and YES Bank, have already implemented the new guidelines.
• Benefits for Cardholders: Choosing your preferred network can offer advantages such as wider acceptance, exclusive offers, and enhanced convenience.

The RBI issued a circular on March 6 prohibiting banks and non-bank card issuers from entering into exclusive agreements with card networks. The central bank wants banks and non-banks to give their customers the freedom to pick from multiple card networks.

 The RBI guidelines aim to drive networks to compete on benefits, fees, and customer experience, potentially leading to better rewards, and lower fees.

Increased Competition: By giving customers a choice, the RBI aims to create a more competitive environment among card networks

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Network-Specific Offers: This competition could lead to networks offering more exclusive benefits and perks to attract customers.

Example: The recent introduction of a RuPay lounge at Delhi T3 airport demonstrates how networks might differentiate themselves with unique offerings.

However, according to the RBI guidelines, card issuers with their own authorised card network (i.e., those who operate their own network) are exempt from the circular's requirements. American Express, which operates its own network, is exempt from the RBI's requirements.