Things To Keep In Mind When Choosing Your Credit Card Network

The Reserve Bank of India has asked banks to offer the choice of a card network to their customers. This is to ensure that there are no private agreements, whereby the banks just issue a selected card network provider and that the customer has no say in the matter. This will give a proper choice to the individuals as they can make their own decisions.

This factor now also raises the responsibility on the individual to make the right selection and here are some conditions that they need to consider when making this choice. 

There are five card network providers that your bank will most likely ask you to choose from and these would include American Express, Diners Club, Mastercard, Visa and Rupay. Out of them, it could be that American Express and Diners Club have a limited reach, so the choice could narrow down further to the remaining three. There might be an existing credit card that is present with the individual, that is from a specific card issuing network. In this case, it might make sense for the individual to go to another network, so that there is diversification. There are different benefits that a card network might provide and hence this would ensure that a person has a suite of service providers in their wallet. 

The choice about the card network provider also depends on the coverage that a network has. For example, if a person finds that a specific provider is not accepted at several places, or that some other network is now being widely accepted, then they might make their choice accordingly. It could be that a person might have to travel to certain places for work and at that place a specific network is strong or weak. The situation would vary with each individual and hence, one cannot say that a certain thing would be applicable to all. Overall, a better coverage in terms of wider acceptance would be a good thing and the card holder can prefer to join such a network. 

There has to be a cost benefit analysis that every individual needs to make with respect to the various card networks. This can determine the card that they would want to hold. On the cost front, it should not be that merchants or other places where the cards are accepted pass on some charges to the customer for using a specific card. This would become an additional expense for the individual and they would be better off using some other card at such places. On the benefit side, it could be that there are some incentives that are being handed out by the network in terms of discounts or cash back, for using its cards for specific expenses. There are several such tie ups that are present and where the customer is able to gain and these could prove to be beneficial to them both in terms of usage, as well as in terms of cost. 

One of the other thing to also look at very carefully is the scope of international spread of the card network. There are times when a person has to either travel abroad, or actually use their credit card on international sites. In both of these cases it becomes important for the card network to be present at the international level, so that this facilitates the use of the card. If there is a limited network, then the usage would be curtailed and it could lead to a situation where the individual might find themselves in a spot of bother, even though they have a credit card. This is something to watch out for and tackle so that there is no problem at a later stage when the card is being used.

Arnav Pandya is founder Moneyeduschool.