The purpose behind this is to ensure customers’ convenience.
The RBI is now seeking suggestions from stakeholders regarding the draft circular until August 4.
The Reserve Bank of India (RBI) unveiled a draft circular on July 5, outlining guidelines for the issuance of debit, credit and prepaid cards. The circular highlighted that these cards should not be restricted to a specific network; and instead, promote universal acceptance across all networks to nurture a more inclusive and customer-friendly environment in the card payment ecosystem. According to the circular, there is currently an agreement between card networks and banks or non-banking institutions for issuing these cards, which might not be beneficial for customers in all circumstances. Taking this into consideration, the RBI is now seeking suggestions from stakeholders regarding the draft circular until August 4. The purpose behind this is to ensure customers’ convenience in using their debit, credit and prepaid cards across various networks.
The Central Bank stated that card issuers should refrain from entering into any agreements that restrict them from using the services of other card networks. In the draft circular rolled out by RBI, it maintains that both, card-issuing banks and non-bank entities, along with card networks, must adhere to these regulations when entering into new agreements or amending and renewing existing ones. This directive promotes more flexibility and freedom of choice for card issuers.
The RBI Committee on Wednesday proposed several short-term and long-term suggestions to make the rupee an international currency. These include enabling Indian banks to conduct foreign transactions in domestic rupees, granting permission to non-resident citizens for opening rupee accounts and withdrawing tax deductions on masala bonds.
The Inter-Departmental Group (IDG), headed by RBI Executive Director RS Ratho, stated that internationalising the rupee is an ongoing process for which sustained efforts are required. In short, RBI aims to build an affordable and competitive payment system, ensuring smooth transactions between merchants and card issuers.
Industry Statistics
Mastercard, Visa, American Express, Diners Club, and RuPay are prominent players in the card issuance industry. RuPay has a dominant position in the debit card market, representing 65% of all debit cards issued in India, accounting for a staggering 700 million cards. In contrast, Visa and Mastercard collectively hold a significant market share of 70 to 80% in the credit card segment, while Rupay has a relatively smaller presence in this market.
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