India tells banks to stop exclusive deals on credit cards

INDIA’S central financial institution advised the nation’s lenders to cease getting into into unique agreements with bank card networks, in a shock transfer that will deal a blow to the world’s largest funds companies together with Visa and Mastercard.

Banks and non-bank lenders should cease “any arrangement or agreement with card networks that restrain them from availing the services of other card networks,” the Reserve Bank of India mentioned on its web site on Wednesday (Mar 6). Lenders and card networks comparable to Visa and Mastercard at present require prospects to comply with phrases that aren’t “conducive to the availability of choice for customers,” it mentioned. 

Banks will now want to supply an choice to their prospects to select from a number of card networks on the time of challenge, whereas current cardholders might choose their networks on the time of the subsequent renewal. 

The transfer might affect Visa and Mastercard probably the most in India as they cost varied charges primarily based on their card choices, together with to be used abroad. Cards from Rupay, a part of India’s homegrown National Payments Corporation, don’t succumb to community registration charges and are sometimes free for home utilization. 

The new directive is not going to apply to bank card issuers with fewer than 1 million energetic playing cards and received’t affect issuers utilizing their very own authorised community for such playing cards, the RBI mentioned. This might largely protect card networks comparable to American Express because it makes use of its personal community. BLOOMBERG

Source: www.businesstimes.com.sg”