Card Networks & Card Issuers in India

The credit card industry has grown tremendously in India. There are many developments happening in the space, with varied innovations and changes in technology. These new developments offer smooth onboarding journeys, differentiated card products, personalised offers and rewards, and better mobile apps, which have proved to be greatly beneficial to existing customers and attracted new customers as well. Credit card issuers are also making efforts to bring further innovation and awareness to this space. The same can be seen from the significant growth in India’s credit card market.

Credit card industry in India

Credit-confident Indians are flipping out their credit cards for big-ticket purchases, encouraged by reward points, cashback, no-cost equated monthly instalments (EMIs), and premium lifestyle rewards. Credit cards also strengthen an individual’s credit histories and therefore more young Indians buy their first credit card, and credit-wise Indians opt to upgrade to premium credit cards. With RuPay credit cards, payments can now be made over Unified Payments Interface (UPI). This is reflected in the steady growth of the average transaction.

Having said that, India is still largely an under-penetrated market, and ~3% of the population have a formal credit card. Traditionally, the Indian population has been operating in a conservative manner when it comes to using credit cards and is generally averse towards using these. However, major players in the payments ecosystem are now working towards changing this scenario by introducing various developments and spreading awareness about using credit cards in daily transactions. These developments and the consequent changing trend in customer behaviour have been discussed in detail in the upcoming sections.

Credit card network vs. Credit card issuer

Credit card networks and issuers play an important role in how your credit card works, where it’s accepted and the benefits you can receive.

Credit cards come with unique colors and designs that set them apart from one another. But they all have common brand logos on the front or back of the card network that backs your card and the financial institution that issues your credit card, known as the card issuer.

Networks and issuers play very different but essential roles in how your credit card works. Card networks and issuers work together to process transactions from bank to bank, plus they facilitate where you can use your card. There are even some companies that act as both a network and an issuer, which allows them to control more of the transaction process.

Which Card networks are available in India?

The role of a card network is to facilitate transactions between merchants and card issuers. To do this, card networks create virtual payment infrastructures and charge merchants interchange fees for processing consumers’ credit or debit card transactions.

The card networks operating in India include Visa Worldwide Pte. Ltd., MasterCard Asia-Pacific Pte. Ltd., American Express Banking Corp., Diners Club International Ltd., and Rupay, developed by the National Payments Corporation of India and in partnership with Discover & JCB.

Out of these card networks, AMEX is both a Card Network as well as a Card Issuer.

Card networks have partnerships across numerous industries relating to travel, transportation, dining and entertainment. Having a card within a certain network may entitle the cardholder to travel perks, purchase protections and more depending on the terms and benefits.

RuPay, a product of National Payments Corporation of India (NPCI), went global in March 2012 by tying up with Discover Financial Services, and marked RuPay’s entry into the Indian sector of premium cards. The three card variants - Classic, Platinum and Select are available under RuPay Global and are accepted at over 42.4 million POS locations and over 1.90 million ATM locations in 200+ countries and territories worldwide.

In May 2015, NPCI entered into a pact with China UnionPay to enable people from China to use ATMs and make card-based purchases in India. It will also help domestic banks, which have put up ATMs or the point-of-sale machines (PoS), earn transaction fees of up to USD 1 per transaction.

In July 2019 RuPay launched RuPay JCB Global Card in association with JCB International Co. Ltd. The RuPay JCB Global card can be used at RuPay card accepting points in India and Japan Credit Bureau (JCB) card accepting points outside India for PoS, E-Commerce and ATM.

Currently, RuPay cards are accepted at the points of sale (PoS) machine powered by Discover of the US, Diners Club, JCB of Japan, Pulse and Union Pay of China.

How these Card Networks differ?

The Visa and the MasterCard are the most popular forms of cards in India. Both Visa and MasterCard are a payment gateway that supports the payment facility to almost all the major banks from around the world. There is no major difference between a Visa and a MasterCard; they both have similar functioning and also work as an ATM card. However, neither of these credit cards or the Diners / Discover credit card provides any credit to the users; they simply support payments.

In an attempt to reduce the dependence on the foreign payment gateway and promote the Indian payment network, the government of India introduced the RuPay cards. Today, a lot of Indian banks issue RuPay credit card, and it has been immensely popular among the Indian credit card users.

One of the major difference between a RuPay card, An American Express Credit card, a MasterCard and a Visa Credit card is the operating cost. The banks that issue a MasterCard or a Visa card or an American Express credit card are obliged to pay a fee every quarter for joining these foreign payment networks. But with RuPay cards, the bank need not pay any fees to join the network, hence there are no processing or transaction fees involved for using these cards.

Another major benefit RuPay has over all other Card Networks operational in India is that the RuPay credit cards can now be linked to a UPI ID, thus directly enabling safe, and secure payment transactions. RuPay Credit Cards on UPI will provide a seamless, digitally enabled credit card lifecycle experience for the customers. Customers benefit from the ease and the increased opportunity to use their credit cards while Merchants benefit from the increase in consumption by being part of the credit ecosystem with acceptance of credit cards using asset lite QR codes.

Who are the major Credit Card Issuers in India?

Credit card issuers are financial institutions (banks and non-banking financial companies NBFC) that provide cards and credit limits to consumers. As per current practice, these financial institutions choose the card network for various customer services through bilateral agreements with the card network companies. Issuers manage numerous features of credit cards, from the application and approval process to distributing cards, deciding terms and benefits (such as annual fees and rewards), collecting cardholder payments and more.

Card issuers also determine how much credit to extend to you and have the final decision on whether a transaction you make is approved or denied (more on how transactions are processed is given in the section below).

As of April 2023:

💳 Average transaction value was Rs 5,120 compared to Rs 4,731 in the same period a year-ago.

💳 Indian market is dominated by four lenders which issue 71 per cent of the total cards.

💳 Credit cards in circulation increased to 8.6 crore, up by 15 per cent compared to 7.5 crore a year-ago.

💳 Average monthly spend increased to Rs 15,388 , up by 9.37 per cent compared to Rs 14,070 a year-ago.

💳 Outstanding debt increased to Rs 2 lakh crore, up by 30 percent from Rs 1.54 lakh crore in April 2022.

How credit card networks and issuers work together?

Card networks and issuers work together to process transactions that consumers make at merchants.

For instance, let’s say you have the Club Vistara IDFC FIRST Credit Card powered by MasterCard (see card features and benefits) and use it to purchase travel tickets at Vistara. The four players involved in the entire payment process include you (the consumer), Vistara (the merchant), MasterCard (the network) and IDFC First Bank (the issuer).

The action of paying with your credit card initiates a sequence of events. Here’s the process:

• You swipe, insert or tap your card at checkout.

• Vistara sends the transaction to MasterCard.

• MasterCard sends the transaction to IDFC First Bank.

• IDFC First Bank will review the transaction and approve or deny it, then send the decision back to MasterCard.

• MasterCard passes it along to Vistara and your transaction will be approved or denied.

This digital communication happens more or less instantaneously with every swipe of your card or scan of your chip.

Recent Update:

The Reserve Bank of India (RBI) issued a draft circular seeking to allow customers to choose card networks like Visa, Mastercard, RuPay, etc. for their debit, credit, and prepaid cards. In the circular, RBI observed “that (the) arrangements between card networks and card issuers are not conducive to the availability of choice for customers.” RBI, therefore, has directed the card issuers to factor in the “public interest”.

Consequently, the central bank issued the following instructions for card issuers.

• The card issuers will not enter into any restricting agreement with card networks which stops them from using other networks and services.

• The card issuers will issue cards from multiple networks across all authorised networks.

• The card issuers will offer customers an option to choose from among the card networks they offer. The option will be available to the customers at the time of issue or at any subsequent time.

• The card issuers and the card networks must follow these instructions and comply with these requirements at the time of amendment in the existing agreements or at the time of renewal. Moreover, from July 5, 2023, the agreements executed must adhere to the above mentioned requirements.

• RBI data for May 2023 shows 87,747,311 credit cards and 9,73,926,235 debit cards issued outstanding after adjusting the withdrawn and cancelled cards.

• The bank has asked for feedback from the stakeholders on the draft circular. They can send comments or feedback to RBI through email or post. The last date to give the input is August 4, 2023.

BONUS: Credit Card Safety Tips

Protect your details:

Never share sensitive credit card information such as card number, expiry date, CVV, OTP and passwords, with anybody. Lenders or their representatives will never seek these information with you either on email or phone call.

Secure your card:

Keep credit card safe and never leave it unattended. If the credit card is lost or misplaced, report to the Card Issuer immediately both over phone and email.

Keep a tab on monthly statements:

Regular review of credit card statements should be done to identify any unauthorised transactions.

Beware of phishing:

Beware of suspicious links shared over email, SMS or Social media emails asking for sensitive financial information.

Bottom line

Once you know the difference between a credit card issuer and network, you’ll have a better understanding of the benefits you can receive from your card and where it’s accepted. Knowing how networks and issuers work can also help inform the next credit card you open. 

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