A Game Changer or Freedom of Choice in Financial World
Credit Card Portability allows users to exercise their freedom of choice to choose their preferred network provider for the cards. Card networks are payment processors that enables transactions and communications between merchants, card issuers and card holders. They facilitate the authorization, clearing, and settlement of card transactions. Card networks available in India are Visa, Master Card, American Express, Diners club International and Homegrown Rupay, developed by NPCI.
Three Parties towards Credit Card Portability
- Card Holder or Card User: He is the one who applied for the card which he receives from Card Issuer.
- Card Issuer: Card Issuers are the Banks or NBFC partnerships who partner with card networks to provide their services.
- Card Network: The Payment processor who facilitates transactions between card holders and card issuers.
Currently, Power lies with card network who facilitates transactions between card holders and card issuers. Card network through agreements between them and card issuers, stop card issuers to use services of other card networks. It also, stop card holders from receiving services from other card networks for card segment.
Whereas in aftermath post credit card portability implementation, Power instance shall be changed from card network to card holders. but overall, it shall have benefits for all parties in some sense or other.
Credit Card Portability Benefits
- It gives freedom of choice to card holders to choose from their preferred network provider for their credit cards, debit cards or prepaid cards.
- It gives freedom to card issuers from not entering into agreement with card networks which will restrain them from availing other card network services.
- It will provide a level playing field for all card networks to have their own share of the card market.
- It will be treated as rationalization of the card market having benefit for all stakeholders.
Reserve Bank of India has made draft circular for feedback and suggestions until August 4, 2023, with the proposed implementation of credit network portability scheduled from October 1, 2023. It further stated that
Card issuers shall not enter into any arrangement or agreement with card networks that restrain them from availing the services of other card networks.
This means that a credit card issuer, say a bank, will not get into an agreement with a card network that does not allow them to use the services of any other card network.
This will let card issuers issue cards across more than one card network. In extension to the above statement, the draft says that
Card issuers shall provide an option to their eligible customers to choose any one among the multiple card networks. This option may be exercised by customers either at the time of issue or at any subsequent time.
