DH Deciphers | Card Network Portability

The Reserve Bank of India (RBI) recently issued a draft circular that seeks to empower debit, credit, and prepaid card users to select their preferred card network. The RBI has invited public comments on the circular by August 4 and has set October 1 as the date for implementation. When the new rules come into force, the customers will have the option to choose their card provider either at the time of issue or any other subsequent time. This will pave the way for card network portability just like mobile number portability. In this issue of DH Deciphers, Gyanendra Keshri decodes the card network portability and its impact on customers and card issuers like Visa, MasterCard and RuPay. 

What is card network portability?

Card network portability gives customers the freedom to choose and switch between networks such as Visa, MasterCard and RuPay. It is similar to mobile network portability where the customers get the freedom to switch from one telecom service provider to another without changing the number. This means a card user can switch from Visa to RuPay to MasterCard without changing card accounts and other details.  

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What is the current practice?

Currently, a customer has hardly any say in the selection of a card network. Typically, the decision is taken by the card issuer without taking any input from customers. For example, when you apply for a debit or credit card, you are not asked for any option or input for a network provider. Issuing banks or non-banking financial firms select your network provider and you get to know about it when your card is delivered.  

What does the RBI propose to change?

In the draft circular, the RBI has noted that the 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. The RBI has also proposed that card issuers shall not enter into any arrangement or agreement with card networks that restrain them from availing the services of other card networks. This means the card issuing bank will not be allowed to have any exclusive arrangement with any card network. “Card issuers shall issue cards across more than one card network,” the RBI noted in its draft circular.

How is it important for customers?

It will give customers the flexibility to choose the network that best suits their needs. Typically, the factors that impact card service include reward programmes, acceptance and customer service. The choice of portability will lead to increased competition among card networks that will benefit customers in terms of better pricing and service experience.

What is the timeline?

The RBI issued the draft circular on July 5, 2023. The central bank has placed the draft circular on its website for feedback and suggestions for which the deadline is August 4. The card network portability is proposed to be implemented from 1st October 2023.

Which are the authorised card networks in India?

The authorised card networks in India are American Express Banking Corp, Diners Club International Ltd, MasterCard Asia/ Pacific Pte Ltd, National Payments Corporation of India – Rupay, and Visa Worldwide Pte Limited. The network branded and displayed on the card includes American Express, Diners Club International, MasterCard, RuPay and Visa.