The Reserve Bank of India has urged card issuers not to enter into any agreements or arrangements with the card networks that prevent them from using the services of card networks in its latest circular.
Additionally, it has requested that card issuers give eligible customers the choice of any one of the many card networks. Customers may exercise the option at the time of issuance or at any point in the future, the central bank stated.
The RBI draught circular further stated that “card issuers and card networks shall ensure that they comply with the aforementioned requirements in existing agreements at the time of amendment or renewal thereof, and fresh agreements executed from the date of this circular.”
The rule overturns the custom of an agreement between card issuers and networks, allowing for the transfer of card networks. SAG Infotech’s managing director, Amit Gupta, explains this phrase.
He defines credit card network portability as the capability for users to move their credit card accounts between networks.
According to Gupta, “Credit card network portability allows cardholders to maintain their existing credit card accounts, balances, and credit history while switching to a different payment network, just like we can switch our mobile service providers while keeping the same phone number.”
How does it benefit customers?
Customers will be given the freedom to choose the card network that best matches their needs, whether those needs are based on rewards programmes, acceptance, or customer service, according to Amit Gupta.
Additionally, he said that it will increase competition amongst credit card networks and offer consumers more say over their financial decisions. Gupta stated that some credit card networks or issuers might not support portability and that there might be particular terms and limitations associated with the transfer procedure.
Therefore, before making any decisions, those thinking about credit card network portability should carefully research and weigh their options, he noted.