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RBI has just lobbed a disruptor at the card sector

July 11, 2023

RBI has just lobbed a disruptor at the card sector
In a recent circular, the Reserve Bank of India (RBI) seems to have fired a shot in India’s war on international card networks. The country is slowly pushing back against international card networks such as Mastercard and Visa which dominate the card sector. RuPay, India’s homegrown card network which was started in 2012, has gathered momentum in recent years. The RBI’s circular on cards might propel it further.

Reliance on international payments networks makes a country vulnerable in today’s geopolitical landscape. India’s efforts to become self-reliant in payments systems and networks predate the Russia-Ukraine war, but the conflict has highlighted how a country can be economically damaged if it is cut off from international payment networks.
 
The RBI’s new circular on debit and credit cards can go a long way in loosening the grip of international card networks on India.
 
The RBI has proposed that banks and card network providers such as Mastercard, Visa and American Express cannot get into exclusive arrangements. It says such arrangements curb competition and put the consumer at a disadvantage.
 
Networks of Mastercard, Visa, American Express, Diners Club International, and homegrown RuPay provide services to customers in India, but the provider is usually predetermined by the bank depending on the card issued.
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