Credit Card portability: How customers can change their card network from Visa to MasterCard to RuPay or any preferred network; Check details

The Reserve Bank of India (RBI) on Wednesday issued a draft circular on the issuance of debit, credit and prepaid cards, wherein customers will have the power of their desired card network or issuer instead of continuing with their issuance bank or finance companies.  

The central bank in its draft circular has said card issuers, such as Visa, MasterCard, RuPay, shall issue cards across more than one card network and should provide an option to the customers to choose any one among the multiple card networks. 

The central bank has that the proposed rules would be applicable to both banks and non-banking financial companies that issue credit cards, debit cards, or prepaid cards.

What’s the proposal? 

The RBI has proposed that from October 1, credit card issuers will have to give customers the option to choose the network of their choice. Therefore, card users can shift from one network to another.  

At present, Indian customers have access to five credit card networks – Visa, MasterCard, RuPay, American Express and Diner’s Club. From October 1, customers can shift to any network. 

The RBI’s draft circular also restrained card issuers from entering into agreements that limit their ability to tie up with other card networks. 

"Card issuers and card networks should ensure to adhere to these requirements in existing agreements at the time of amendment or renewal and fresh agreements executed from the date of the RBI circular," the notification said. 

That option may be exercised by customers either at the time of issuing, or later, the RBI added. 

 These changes will be effective from October 1 and stakeholder feedback is invited by August 4, the RBI said. 

What does RBI expect to change? 

According to RBI, when banks tie up with card networks to offer their services, customers don’t have a choice to choose these offerings. 

The central bank has noted that some banks have been asking customers to accept particular card networks, which they might not prefer. 

“It is observed that arrangements existing between card networks and card issuers (banks and non-banks) are not conducive to the availability of choice for customers,” the RBI noted.  

In 2021, the RBI indefinitely barred Mastercard, American Express and Diners Club from issuing new debit, credit or prepaid cards to customers over noncompliance with local data storage rules.  

The ban was lifted later in June 2022 after the central bank observed company’s compliance with payment data storage regulations. 

How can one port their credit cards? 

As per RBI proposed guidelines, the card network portability option will be included in existing agreements or at the time of renewal or in fresh agreements executed from the date of the circular.  

The RBI said that card issuers and card networks shall ensure to adhere to these requirements: 

Existing agreements at the time of amendment or renewal thereof, and 

Fresh agreements executed from the date of this circular. 

Why does it matter? 

India has seen a huge growth in credit card outstanding in FY23. According to RBI data, credit card outstanding has soared to Rs 2 lakh crore, a rise of 29.7 per cent on a year-on-year basis. Banks have issued 8.65 crore credit cards, as of April 2023.  

At present, monthly credit payments are over Rs 1 lakh crore every month, with card payments touching Rs 1.32 lakh crore in the month of April 2023. 

The introduction of customer's prority in chossing the card network can warm up the segment and boost competition among international and homegrown network companies.  

Industry voices

“Traditionally, consumer choice in cards in India has rarely been driven by the network. Unlike markets like the US, choice has been driven by the issuer and the underlying value proposition. The proposal by RBI is a significant move as it will bring wider choice to consumers, while also ending exclusive issuance arrangements that card networks have with leading issuers. This will provide banks with much-needed encouragement to issue credit cards on UPI, as that is clearly the strongest proposition on the credit side from the Rupay network. On the debit side, the bulk of the issuance volume is currently on Rupay and most PSUs issue RuPay cards by default," said Ranadurjay Talukdar, Partner and Payments Sector Leader, EY India.

"In the short term, for banks, the cost of implementation and compliance will increase. Primarily because this is now a regulatory requirement. Most banks were already issuing multiple network cards, especially since MasterCard, Diners and American Express sourcing was stopped due to data localisation. Banks had already learned it that time to have multiple networks and plan for BCP. That aside, cobrand cards are mostly exclusive deals and those agreements will undergo changes. Again reiterating, changes in network will unlikely have an impact on card features that customers enjoy," said Mohit Bedi, Chief Business Officer and Co-founder, Kiwi.

He added: "For networks, especially the new and smaller ones like Rupay, Diners etc, will gain cause now more banks will start onboarding them. Visa and Master are competing brands and since the circular specifies "any 2 networks" they might just give an option of non-competing one. Hence I feel that our homegrown network will gain."

"There are genuine concerns from the customers regarding substantially higher interest rates the banks charge for issuing a credit card. There are concerns about grievances redressal and transparency. It looks like RBI wishes to open up the card markets for competition so as to address these concerns. Though the competition might hamper the profitability of the card issuers and the networks alike, we are hopeful that the volumes that arise would be adequately compensating the losses," said Dr A V Arunkumar, Professor, School of Business, RV University, Bangalore.

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