RBI issues draft circular on debit, credit and pre-paid cards: here're the details
RBI draft circular on cards: The RBI wants the payment system to be cheap and without any company dominance. Further, it aims to ease transactions between merchants and card issuers.
RBI draft circular on cards: The Reserve Bank of India (RBI) has released a draft circular on the issuance of debit, credit, and pre-paid cards and has sought people's feedback on the same by August 4. The central bank plans to implement the rules on October 1. The rules will be applicable to both banks and non-banking financial companies (NBFCs), as per Zee Business Research.
What is the draft?
The RBI has proposed that debit or credit cards should not be issued for any particular network, and there should be a facility for these cards to be used on any network. Besides, going forward, banks should ensure that customers have the facility to choose cards from more than one issuer. Further, the RBI also proposed that during the time of card issuance or even going forward at any time, customers have the facility to change the issuer. It was reported that if these rules became law, they would be implemented on both new and old cards. This aside, the apex bank also proposed that there should not be any exclusive agreement between card-issuing banks and networks.
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The RBI wants the payment system to be cheap and without any company dominance. Further, it aims to ease transactions between merchants and card issuers. The RBI further said that there should be a focus on creating a card network infrastructure and that card issuers should not tie up with any one network.
Companies such as Mastercard, Visa, American Express, Diners Club, and Rupay issue cards. Rupay has leadership in the debit card market, as out of the total debit cards issued in India, 65 per cent are Rupay's cards. There are around 70 crore Rupay cards in the country. As regards credit cards, Visa and Mastercard together command nearly 70 to 80 per cent market share. On the other hand, Rupay's market share in the credit card segment is quite low.