Solution

The Reserve Bank of India (RBI) has issued a draft circular addressing the arrangements between card networks and card issuers when it comes to the issuance of debit, credit, and prepaid cards. The circular aims to enhance customer choice and ensure a competitive market for card networks.  When a card is issued to a customer, the choice of the affiliated network is determined by the card issuer. This selection is based on the previous arrangements established between the card issuer and the card networks through bilateral agreements.   Therefore, the RBI has exercised its powers under the Payment and Settlement Systems Act, 2007, to introduce the following measures for card issuers to adhere to:   ·        Restriction-free arrangements o   Card issuers are prohibited from entering into any agreements that restrain them from availing the services of other card networks. o   Card issuers must issue cards across more than one card network, providing customers with a wider range of options so that they can choose a network that best suits them.   ·        Customer Choice o   Card issuers must offer eligible customers the freedom to select any one card network from multiple options. This choice can be made at the time of card issuance or at a later stage, depending on the customer needs. o   Both card issuers and card networks are expected to comply with the new requirements set forth by the RBI which will be effective from October 1, 2023.