Credit card portability explained: From what are the benefits to what it entails

• Card holders will have the freedom to port or switch their card networks for their credit, debit, and prepaid cards.
• Card issuers will be required to issue cards across more than one network, so that customers have a choice in selecting their card network.
• Customers can choose the card network either at the time of issue, or later.

From October 1, you will also have the freedom to port or switch your card networks for your credit, debit, and prepaid cards. This new provision will allow users to switch between different card networks.

Here are some frequently asked questions about card portability answered.

What is a card network?

A card network is a financial infrastructure that enables transactions and communication between merchants, card issuers, and cardholders, facilitating the authorisation, clearing, and settlement of card transactions.

For example,when it comes to credit cards, the card networks that are present in India are Visa, MasterCard, American Express, Diners Club International and RuPay, developed by the National Payments Corporation of India.

What has the RBI said?

According to the draft circular by the Reserve Bank of India (RBI), ‘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. Further, 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.’

Why is this significant?

Currently, card networks collaborate with both banks and non-banks to facilitate the distribution of debit, prepaid, and credit cards. Hence, it is the card issuer who ultimately determines which network their card will be affiliated with for example, Visa, MasterCard, RuPay and so on.

When banks form partnerships with card networks to provide their services, customers do not have the freedom to select a network themselves. Customers have to accept specific card networks, even if they do not want to.

How card network portability will benefit you?

Upon the implementation of the RBI's proposal on October 1, cardholders will be able to opt for transferring their cards from one network to another. Since card issuers will issue cards across more than one network, customers can thus choose a card, and also the card network. They can choose the card network either at the time of issue or later. Thus customers will have the freedom to choose both their card issuer and their card network.

Can I switch from one bank to another?

It is important to note that while you can switch or port your card network, in case you have a card, you cannot switch your bank.

Says Adhil Shetty, CEO, BankBazaar.com, “Every lender has their specific eligibility criteria to issue credit cards. These may vary from bank to bank, especially if you are an existing customer. In such situations, the bank may be willing to issue you a credit card based on your past history with the bank even if you have no prior history. Or the bank may be willing to issue you a high-value premium debit card based on your relationship.”

Porting your existing card to a different issuer where you are a new-to-bank customer may not be possible as the new bank may have a very different set of eligibility criteria for the type of card and the associated privileges you have.

“So while you may be able to port your card payment network, you may not be able to port accounts between issuers,” says Shetty.

The central bank has made the draft circular available on its website for feedback and suggestions until August 4, with the proposed implementation of card network portability scheduled for October 1, 2023. So there is a possibility that based on the feedback, the date may be extended.