Payments

Choice is the new currency: Decoding RBI's mandate for credit card portability

Dr Srinath Sridharan

March 12, 2024 | 8 Min Read

The Reserve Bank of India’s recent mandate that credit card issuers allow customers to choose from a range of card networks is set to shake banks and card networks out of their decades-long complacency, fostering innovation and shoring up India’s payments ecosystem.

Key Takeaways

RBI recently mandated that credit card issuers offer customers the flexibility to select from a range of card networks
The move’s impact on consumer decision-making and behaviour may be limited since individuals tend to select cards that align with their lifestyle and needs
What it could do, though, is intensify competition among card networks, which may see them offer better perks and offers to attract cardholders
RBI’s new directive is also anticipated to level the playing field between domestic and foreign networks, giving RuPay a leg-up

The Reserve Bank of India (RBI) recently mandated that credit card issuers offer customers the flexibility to select from a range of card networks, effectively prohibiting them from engaging in exclusive partnerships with any single card network for credit card issuance.

According to the directive, card issuers must offer eligible customers the choice to select from multiple card networks during the issuance process, with the central bank giving credit card issuers a six-month deadline to comply with the new rules. Notably, these directives do not apply to credit card issuers with a card issuance volume of less than a million active cards. Certain card issuers, such as American Express, which operate on its own authorised card network, are also exempt from these regulatory measures.

India has five authorised card networks—American Express Banking Corp, Diners Club International Ltd, MasterCard Asia/Pacific Pte Ltd, National Payments Corporation of India–RuPay, and Visa Worldwide Pte Ltd. Primarily functioning as merchant payment systems, authorised card networks facilitate the issuance of various card-based products, including credit cards, debit cards, and prepaid cards.

As of January 31, 2024, the total number of outstanding credit cards stood at 99.5 million, as per the latest data from the RBI. The leading credit card issuers include HDFC Bank (20.1 million), SBI Cards (18.6 million), ICICI Bank (16.8 million), and Axis Bank (13.7 million).

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