RBI New Proposed Guidelines for Card Networks: Empowering Customers and Promoting Choice in Card Networks

[Shubham Yadav]

How many of you think these guidelines will be implemented tomorrow ?

Tum chaho toh puri ki puri krwa dete h

 

[rohit_]

How many of you think these guidelines will be implemented tomorrow ?

aaj tak guideline ka sara rule kabhi bhi first attempt me implement to RBI nahi kar paya hai, postponed kiya hai

 

[WinSuperb7251]

I called every bank whose credit card I have and no one know about this new guidelines

 

[hritiksakshi]

Please excuse me for being a noob here, but have two queries in relation to this.


I understand the part where the banks have to provide options for card network...say a regalia card can be issued on master/visa or rupay...now customer will have the choice to switch to his/her preferred network
1) when issuer itself is the network say like amex, how will this circular work? Will rbi mandate amex to launch cards on other networks.

2) the draft also notifies that banks shouldn't enter exclusive arrangement with any network, but in case of hdfc, the whole diners partnership is based on that.
So it means now for diners black , hdfc cannot continue the exclusive partnership?

@TechnoFino da pls answer

 

[Walter White]

I called every bank whose credit card I have and no one know about this new guidelines

RBI guideline ka SS bheja karo saath me.

 

[TechnoFino]

Please excuse me for being a noob here, but have two queries in relation to this.


I understand the part where the banks have to provide options for card network...say a regalia card can be issued on master/visa or rupay...now customer will have the choice to switch to his/her preferred network
1) when issuer itself is the network say like amex, how will this circular work? Will rbi mandate amex to launch cards on other networks.

answer: https://www.technofino.in/community...etwork-changes-explained-with-examples.18582/

2) the draft also notifies that banks shouldn't enter exclusive arrangement with any network, but in case of hdfc, the whole diners partnership is based on that.
So it means now for diners black , hdfc cannot continue the exclusive partnership?

@TechnoFino da pls answer

The guidelines are intended to protect the bank's interests. Card networks should not prevent banks from issuing the same card on another card network. So yes, if HDFC Bank wants to provide the same features as the DCB card on another card network, they can do so. However, please remember one thing: Diners Club offers certain benefits from their end, and if HDFC Bank decides to offer the same card on another network, Diners Club will not extend their partner benefits to that new card.

 

[RaviAgl]

I read the whole thread word to word.. all 6 pages.

Seems, I am a bit late to party.

Why was this circular issued? - should also have been a core point of discussion but has probably not been discussed the way it should have been.

Now, what I think is that-

During the Russia Ukraine war, mastercard and visa being American Companies (and upon order from the US government) had to withdraw their network support from the Russian Banking System, thereby paralysing the Russian economy.

The US always acts like Big Brother and uses it muscle power in all possible ways.

Hypothetically speaking, if we went to war with Pakistan (who the US supports when it has to choose between India and Pakistan) or any other US ally, then this is bound to be repeated. India does not want any such thing to happen in case we enter a warlike situation.

So, in order dilute our dependency on the foreign card networks and also in order to save Indian money (Rupay cards are operated by India, so whatever network fees charged in the form of MDR remains in India and contributes to its GDP), the RBI (alongwith government policies) has taken this step to popularize Rupay.

Thanks!!

 

[sxchzy]

russia also had its own card network MIR
plus Russia had started shifting to hold gold instead of us dollar/bonds as central bank reserves.

 

[Abhishek012]

russia also had its own card network MIR
plus Russia had started shifting to hold gold instead of us dollar/bonds as central bank reserves.

Our International Payment through Visa/Mastercard/Amex/Discover/Diners Club also settled in US Dollar using US backend "SWIFT" transfer.

NPCI is developing a new payment system called "LCSS" (Local Currency Settlement System), The LCSS will enable exporters and importers to pay in their respective domestic currencies and enable the development of an INR-AED forex market. It will reduce transaction costs and settlement time, including for remittances by Indians in the UAE.

The LCSS will link India's UPI, RuPay Card and UAE's IPP, UAE based Domestic Cards, UAE Banks to facilitate fast, convenient, safe, and cost-effective cross-border funds transfers.

The LCSS will:

• Develop an INR-AED foreign exchange market
• Reduce transaction costs and settlement time
• Promote investments and remittances between the two countries
• Enhance access to payment services for citizens and residents of the two countries

@RaviAgl

 

[Quantum]

On review, the RBI has observed that the existing arrangements between card networks and card issuers (banks and non-banks) limit the availability of choices for customers. As a result, the RBI has drafted a set of guidelines and is seeking feedback. It is expected that the implementation of these proposed guidelines will benefit both customers and banks.

The proposed guidelines are as follows:

1. Card issuers shall not enter into any arrangement or agreement with card networks that restrain them from availing the services of other card networks.
2. Card issuers shall issue cards across more than one card network.
3. 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 recommended that banks and card networks implement these guidelines during amendment or renewal processes and in new agreements executed from the date of this circular (5th July, 2023). The directions specified in paragraph 3(b) [2] and (c) [3] will take effect from October 1, 2023.

These guidelines empower customers to select a card network of their choice, provided that the card issuer already offers cards on multiple networks. Previously, there have been cases of banks refusing to change card networks, but after October 1, 2023, banks will be obligated to honor customer requests.

This guideline will also benefit banks as card networks will no longer be able to prevent them from issuing cards on other networks.
Here's an example to illustrate the impact:
Suppose Bank X issues the "Bank X Cosmic Credit Card" on the Visa network. Visa cannot prohibit Bank X from also offering the "Bank X Cosmic Credit Card" on Mastercard or any other network.
In a scenario where Bank X issues the "Bank X Cosmic Credit Card" on Visa, Mastercard, and Rupay networks (multiple card networks), the bank should inquire about the customer's preferred network. If a customer later decides to change their card network, the bank must respect and comply with their decision.
If Bank X issues the "Bank X Cosmic Credit Card" on a single card network, let's assume Visa, then customers cannot request Bank X to issue the "Bank X Cosmic Credit Card" on Mastercard, Rupay, or any other network.

We have voiced our concerns on various social media platforms regarding this issue, and it is reassuring to see that the RBI is paying attention. This is a positive development for all of us.

Please find attached a copy of the draft guidelines.
Link: https://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=4280

@TechnoFino I understand that this circular was "Draft Circular for Comments" which was meant to invite comments/feedback from stakeholders.
Did it come into effect from October 01, 2023 in all its entirety?
If yes, could you please share the link to the RBI press release?

I tried to search the same under RBI Press Releases with some related keywords but couldn't find any.

 

[SSV]

@TechnoFino I understand that this circular was "Draft Circular for Comments" which was meant to invite comments/feedback from stakeholders.
Did it come into effect from October 01, 2023 in all its entirety?
If yes, could you please share the link to the RBI press release?

I tried to search the same under RBI Press Releases with some related keywords but couldn't find any.

To my knowledge, there is no enforceable circular that is issued..
They are probably working on the feedback...

 

[RishiKiDev]

To my knowledge, there is no enforceable circular that is issued..
They are probably working on the feedback...

Yup there's no hard and fast rule by RBI till now on the same.

But most card providers are now lenient on network change if the card is available in another network variant.

 

[SSV]

But most card providers are now lenient on network change if the card is available in another network variant.

Means, they are getting ready for the upcoming rule change...

 

[RishiKiDev]

Means, they are getting ready for the rule change...

Yeah earlier they would ask lot of questions nowadays just an email and a verification call is needed

 

[Abhishek012]

Means, they are getting ready for the upcoming rule change...

Kotak bank already started card network conversion and SBI too.

 

[Quantum]

Kotak bank already started card network conversion and SBI too.

card network conversion or addition of new variants ?

 

[Abhishek012]

card network conversion or addition of new variants ?

card network conversion

Kotak Myntra Mastercard to RuPay Conversion Request Accepted

Kotak Myntra Mastercard to RuPay Conversion Request Accepted: Kotak Myntra RuPay conversion - After fighting for almost 20 days they finally took the request to convert the Kotak Myntra Master to Rupay It finally happened after I sent them the RBI circular regarding payment networks. Fingers...

www.technofino.in

SBI Card, here how to convert Visa to RuPay Credit Card

SBI Card, here how to convert Visa to RuPay Credit Card: Just saw this tweet - 5:47 PM · Jul 26, 2023 - Finally my #SBI #BPCL Visa #creditcard upgraded to #Rupay network on my request Initially denied to convert saying due to internal policy. I followed up regularly & asked the exact reason &...

www.technofino.in

 

[Quantum]

card network conversion

Kotak Myntra Mastercard to RuPay Conversion Request Accepted

Kotak Myntra Mastercard to RuPay Conversion Request Accepted: Kotak Myntra RuPay conversion - After fighting for almost 20 days they finally took the request to convert the Kotak Myntra Master to Rupay It finally happened after I sent them the RBI circular regarding payment networks. Fingers...

www.technofino.in

SBI Card, here how to convert Visa to RuPay Credit Card

SBI Card, here how to convert Visa to RuPay Credit Card: Just saw this tweet - 5:47 PM · Jul 26, 2023 - Finally my #SBI #BPCL Visa #creditcard upgraded to #Rupay network on my request Initially denied to convert saying due to internal policy. I followed up regularly & asked the exact reason &...

www.technofino.in

Okay, so "conversion" is from user's PoV.
My question was from provider's PoV.

Suppose a bank provides their DCs only on MC network. It would be better if they can provide on RuPay and VISA network as well. That's what I meant by "addition of new variants".
If providers add new variants and networks to their card portfolio, then it eventually becomes user's right (given by RBI) to choose any among them or ask for conversion.

 

[Abhishek012]

Okay, so "conversion" is from user's PoV.
My question was from provider's PoV.

Suppose a bank provides their DCs only on MC network. It would be better if they can provide on RuPay and VISA network as well. That's what I meant by "addition of new variants".
If providers add new variants and networks to their card portfolio, then it eventually becomes user's right (given by RBI) to choose any among them or ask for conversion.

It's not an easy to launch all your cards on different card networks.

Banks has to pay card BIN issuing fee, quarterly fee, network operating cost, network joining fees etc specially to Visa/mastercard.

However, Banks dnt have to pay these fees to join RuPay card network but due to zero MDR on RuPay debit card, Private banks like Axis, HDFC, ICICI, Yes bank etc scale down RuPay debit card issuance.

ICICI bank was launched all gemstone debit cards on RuPay platform but just after 11 days of launch govt impose zero MDR on RuPay debit cards.

ICICI bank remove all info of gemstone RuPay debit cards from ICICI and RuPay website. Axis bank and yes bank stopped issuing RuPay Platinum debit cards for saving accounts. However, Yes bank recently started again RuPay Platinum debit cards for saving accounts.

HDFC bank remove RuPay Platinum debit card apply option from HDFC internet banking.

If govt is not interfering on RuPay debit card business, all super premium debit cards will launched on RuPay platform.

However, full support on zero MDR for govt scheme RuPay debit cards like Jandhan yojna card, Kisan card etc.

 

[Quantum]

If govt is not interfering on RuPay debit card business, all super premium debit cards will launched on RuPay platform.

Didn't get you, what do you mean?
You statement actually translates to "because of govt's interference, all super premium DC are NOT getting launched on RuPay PF".