In an effort to improve customer satisfaction and to increase competition in the electronic payments sector, the Reserve Bank of India (RBI) has recently issued a regulation that would enable the credit card holders to select their desired card network. From September 6, 2024, the customers can choose the card network of their choice whether it is MasterCard, RuPay or Visa while applying for a new credit card or while renewing their current card.
Traditionally, the card network has been selected by the banks on behalf of their clients, and most of the time, this has been due to certain contractual agreements with particular networks. However, the RBI’s circular also states that card issuers must offer the customer a choice of multiple networks at the time of initial issuance as well as at the time of renewal.
This initiative is meant to open up the credit card market by forcing competition among networks. In providing customers the flexibility to pick their network, the RBI’s plan is to force networks to start competing on benefits, fees, and customer satisfaction. This could result in higher rewards, lower fees and more merchant acceptance for the cardholders.
This guideline does not apply to card issuers who issue cards on their own proprietary networks such as the American Express. Some of the banks which have already started these changes include Bank of Baroda and YES Bank where customers can select their preferred network during the application process.
Several advantages are accorded to cardholders. Selecting a preferred network has its benefits like higher acceptance, offers like discounts and coupons and convenience. For instance, there are some networks that may have better acceptance in some regions or countries to enhance the transaction convenience.
This action of RBI is viewed as a strategic one to improve the customer experience in the Indian digital payments space and may lead to more network-specific incentives.
