Card network portability

In this newsletter we analyse the current commercial construct between various players in the cards lifecycle to understand who drives the selection of the network provider. We also explore other global domestic card schemes and the key drivers behind their launch. We then analyse the drivers for network selection from a customer standpoint and the high-level impact on banks in implementing the card network portability requirements. 

The new guidelines are expected to challenge the duopoly of the large network providers in India and will compel card networks to come up with innovative propositions to differentiate themselves, which will result in better offerings and service quality for the end customers. This can also be considered as another intervention from the central bank to further promote the adoption of the domestic card scheme (RuPay) in the country, as part of promoting fair competition.

India launched its domestic cards scheme “Rupay” in 2016, which has since seen steady adoption by a number of public and private sector banks in India. However, international players still appear to dominate the Indian card market and to level up the playing field, the Reserve Bank of India (RBI), in a recent draft circular (dated 5 July 2023), made a proposal that will allow customers to select their card networks. These draft guidelines have extended the concept of portability to allow customers to select and switch between the major card networks in India: Visa, MasterCard, RuPay, Amex, and Diners. This would challenge the current status quo of bilateral agreements between the card issuer bank and network provider where the card issuer decides on the network provider, without any inputs or choice being given to the end users.