New Delhi, Sept 22: Popular mobile payment platforms such as PhonePe, Paytm, CRED, and Amazon Pay will no longer allow users to pay house rent using credit cards. This move follows a new directive issued by the Reserve Bank of India (RBI) aimed at tightening norms around digital payments and preventing misuse.
According to the circular, payment aggregators and gateways are now permitted to facilitate transactions only with registered merchants or individuals whose KYC (Know Your Customer) verification has been fully completed. Since most landlords are not registered merchants, rent payments made through credit cards to their accounts have now been restricted.
The RBI took action after observing that some users were misusing rent payment features to transfer funds to friends or relatives under the guise of rent, thereby earning reward points and cashback benefits. These transactions were often processed without proper KYC, raising concerns about financial transparency and misuse.
Fintech companies, the RBI noted, were functioning like unauthorized marketplaces, allowing money transfers without sufficient regulatory compliance. The central bank labeled this practice as non-compliant and potentially unlawful, prompting the immediate suspension of such services.
As a result, rent payment services via credit cards on several major fintech apps have been discontinued until further notice.