RuPay, Visa or MasterCard? From September 6, you'll have the power to choose your credit card network

The RBIs guidelines, allowing customers to choose their network, aims to democratise the credit card market, driving networks to compete on benefits, fees, and customer experience, potentially leading to better rewards, lower fees, and wider acceptance.

From September 6, you will have the flexibility to select your preferred credit card network – MasterCard, RuPay, or Visa – when applying for a new credit card and on renewal. Previously, your bank determined the network for your credit card, but now you can select the one that best fits your needs and spending habits.

The Reserve Bank of India (RBI) issued a circular on March 6 prohibiting banks and non-bank card issuers from entering into exclusive agreements with card networks. The central bank wants banks and non-banks to give their customers the freedom to pick from multiple card networks.

“We support the RBI’s decision to provide choice to consumers on network selection,” a Visa spokesperson told Moneycontrol.

Why did RBI issue a guideline allowing users to choose a credit card network?

Historically, Visa and MasterCard have been the industry leaders in the credit card network. However, now the market is seeing increased competition with the rise of the RuPay network.

“This move from the RBI is part of a strategy to enhance the customer experience in India's digital payments landscape,” said Anil Singh, Country Head, Credit Cards and Merchant Acquiring, YES Bank. The RBI guidelines, allowing customers to choose their network, aim to democratise the credit card market, driving networks to compete on benefits, fees, and customer experience, potentially leading to better rewards, lower fees, and wider acceptance, he added.

However, according to the RBI guidelines, card issuers with their own authorised card network (i.e., those who operate their own network) are exempt from the circular's requirements. This exemption applies to American Express Banking Corp, which will not be obligated to issue its credit cards on networks other than its own proprietary network.

How does it work?

Some banks, like Bank of Baroda (BOBCARD) and YES Bank, have already implemented and are asking customers to select their preferred network when signing up for a new credit card, as directed by the RBI. Just choose your preferred network on the application form, available both online and offline. See the image from YES Bank's online application form for a new credit card.

“Banks are also allowing existing customers to change their card network during renewal simply by emailing them or calling their customer care line,” said Sumanta Mandal, founder of TechnoFino, a platform that reviews debit and credit cards.

Benefits to credit card holders

Enabling customers to choose their preferred card network offers numerous benefits, including enhanced acceptance and convenience. “Certain networks may have wider acceptance in specific regions or countries, ensuring a seamless transaction experience. Additionally, customers may opt for a network based on perceived value, trust, or affiliation," said Ravindra Rai, Whole-Time Director, BOBCARD Ltd.

Ankur Mittal, co-founder of Card Insider, a credit card tracking platform, highlighted the benefits of the new guidelines. He cited the growing popularity of UPI payments, where many cardholders wanted a RuPay credit card but were unable to opt for one due to the lack of network choice. Now, with the revised guidelines, cardholders can review and select their preferred card network, giving them greater control and flexibility.

“The benefits of a credit card mainly depend on the issuing bank, but there are certain network-specific perks that banks pass on to their customers,” said Mandal. For instance, IndusInd Bank issues its Pioneer Heritage Credit Card on both MasterCard and Visa networks. But, if you opt for the Visa Infinite variant, you won't receive the ITC Culinaire membership, but if you choose the MasterCard World Elite network, you'll get the membership for free. This is just one example; there are many network- and variant-specific benefits linked with credit cards.

Credit card experts closely monitoring the industry believe that enabling customers to choose their preferred card network will probably spark competition among networks, ultimately benefiting consumers. "This increased competition could lead to more network-specific offers and perks, such as exclusive lounge access for cardholders of a particular network," noted Mittal. A case in point is the recent introduction of a RuPay lounge at Delhi T3, showcasing the potential for additional benefits in the future.

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Challenges in implementation

Singh said that smaller issuers may face challenges in managing multiple networks, adding that customers might also take time to realise that they can change their card network and also decide on the network if they wish for a change. He was optimistic that tech-savvy customers would adapt and learn to compare network offerings and make informed decisions that suit their needs.

“Banks will guarantee seamless functionality across all networks, ensuring a uniform experience for merchants and their customers,” said Rai. The banks will provide comprehensive support to merchants, enabling them to offer a consistent and hassle-free experience, regardless of the chosen network, he added.

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Impact on pricing and rewards structure

Annual and renewal fees of credit cards are determined by the product variant, not the choice of network, Rai said. "Therefore, customers will continue to pay the same fee for their chosen product variant, regardless of the network they select,” he added.

Mandal too doesn’t feel that the new guideline will impact the annual or renewal fee structure of credit cards. However, banks pay a fee to card networks for using their services, which is negotiated with partners and differs significantly between networks, with RuPay being substantially lower than Visa and MasterCard. However, Mandal noted that banks are unlikely to offer lower fees to customers who opt for a RuPay card variant.