According to reports, the Reserve Bank of India's decision to tighten regulations for payment aggregators has prompted some of India's largest fintech firms, including PhonePe, Paytm, and Cred, to halt rent payments on their platforms.
Key Highlights
- PhonePe, Paytm, Cred halted rent payments via credit cards after RBI tightened PA/PG guidelines.
- RBI’s new rules require full KYC and disallow processing payments for non-onboarded landlords.
Rent payments have grown into a large-volume business with a significant topline impact for fintech firms as users used credit cards to pay rent and earn rewards but the central bank's new rules prohibit payment aggregators from acting as marketplaces, which previously allowed them to process rent payments.
"Rent payments were basically happening because PA-PG were acting as a marketplace for landlords without merchant KYC," sources claim. "That's no longer permitted."
This means that users will no longer be able to use fintech apps to pay their rent with credit cards and will have to rely on online banking or cheques.
Rent Payments UsCredit Cards
In 2024, HDFC Bank Ltd. informed credit card customers that rent payments made through fintech apps would incur a 1% fee up to ₹3,000. Following this, ICICI Bank Ltd. and SBI Cards and Payment Services Ltd. discontinued providing reward points for rent payments.
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Even fintechs such as PhonePe and Paytm followed suit, though some of them resumed credit card rent payments by implementing stricter know-your-customer policies and compliance procedures.
That will no longer be the case. According to an RBI circular issued on September 15, "A PA shall ensure that a marketplace onboarded by it does not accept payments for a seller not onboarded on to the marketplace's platform".
