Ban on Mastercard will hit card issuers having exclusive tie-ups

MUMBAI: RBI’s restrictions on Mastercard will hit credit card issuance by a host of entities. Issuers like RBL Bank and Yes Bank and entities like Indigo, Maruti, Flipkart, Tata, Vistara and BookMyShow — which issue co-branded cards — will need to look for alternatives.
RBL Bank has informed the stock exchanges that approximately 1 lakh new credit card issuances could be hit. The bank is in talks with Visa, but issuing cards under the new network would take 8-10 weeks. RBL Bank has 30 lakh credit cards and is the fifth-largest issuer with a 5% market share. A large chunk of its cards is issued by Bajaj Finserv through a partnership agreement.
A Yes Bank spokesperson said that for new credit card issuances, the bank is evaluating a migration to other platforms for a ‘seamless transition’. It added that its debit cards are also available on Visa and RuPay platforms and new issuances will not be hit.

Bankers say that besides the technical integration, a new partnership with Visa will require banks to negotiate all the incentives and offers afresh. The pandemic has changed the dynamics of the payment industry. While discretionary shopping in malls and stores has dropped, online shopping has accelerated.
According to a research report by ICICI Securities, the restrictions will help improve market share for respective unaffected incumbents. “The issuance of co-branded cards with Mastercard will also stop due to the RBI restriction. If a particular Mastercard co-branded credit card has a high contribution to the overall mix of a credit card player, it will have a higher impact on the issuer’s business growth,” the report said.
According to bankers, Visa will be the primary gainer in market share as banks have been reluctant to issue many RuPay credit cards, because of which its market share is still low. The domestic issuer is, however, the market leader in debit cards in number, but is yet to push spending.