Outlook Business Desk
Major fintech players like PhonePe, Paytm, and Cred have suspended rent payment services on their platforms. The decision comes after the Reserve Bank of India (RBI) tightened regulations around credit card transactions routed through payment aggregators.
In its September 15 circular, the RBI restricted payment aggregators from processing transactions for entities without direct contracts. This hits rent payments hardest, since landlords typically aren’t registered merchants with complete KYC verification.
The circular clearly stated that payment aggregators can only settle funds for merchants with whom they have contractual agreements. In effect, fintechs can no longer act as marketplaces for landlords who aren’t onboarded with merchant-level verification.
Industry sources told Moneycontrol that rent payments had become a major revenue driver for fintechs. Credit card users found it convenient and rewarding, but the model carried compliance challenges, making it sensitive under RBI’s tighter framework.
Even before RBI’s move, banks had raised concerns. In June 2023, HDFC Bank began charging a 1% fee on up to ₹3,000 per transaction. While ICICI Bank and SBI Cards later stopped offering reward points on rent transactions via fintech platforms.
Since March 2024, multiple fintechs including PhonePe, Paytm, Mobikwik, Freecharge, and Amazon Pay had suspended rent payments through credit cards. Some tried resuming services by tightening KYC checks, but the new framework has ended this possibility entirely.
Unlike last year’s indirect hints, RBI’s September 15 circular firmly bars marketplaces from taking payments for sellers not onboarded on their platforms. This direct instruction removes any scope for fintech apps to process landlord transactions without proper compliance.
For users, the change means they can no longer pay monthly house rent through credit cards on fintech apps. They will now have to depend on conventional methods such as direct bank transfers or cheque payments for rent.