No More Rent Payments Via PhonePe Or Paytm – Tenants Hit By RBI Rule Change | Banking and Finance News

Previously, these platforms enabled quick rent payments via credit cards, benefiting both tenants and landlords. (News18)

If you’ve been paying your rent each month via credit card using mobile apps like PhonePe, Paytm, or Cred, things are about to get more difficult. Several fintech platforms have now discontinued their rent payment services.

In recent years, paying rent via credit card has become a popular trend, offering users the chance to earn reward points or enjoy an interest-free credit period. However, this convenience is now being curtailed following the Reserve Bank of India’s (RBI) latest regulations on payment services. The RBI issued a circular on September 15, prompting fintech companies to withdraw the facility.

This move will particularly affect individuals who relied on this method to earn credit card rewards or manage their finances. They will now have to revert to traditional methods such as direct bank transfers or cheque payments.

What Do The New RBI Rules Say?

Under the revised guidelines, payment aggregators (PAs) and payment gateways (PGs) are only permitted to process transactions for merchants with whom they have direct agreements and who have completed the full KYC process. As a result, apps can no longer facilitate rent payments to landlords who are not registered as official merchants on their platforms.

Previously, these platforms enabled quick rent payments via credit cards, benefiting both tenants and landlords. Tenants enjoyed reward points or cashback along with a credit period, while landlords received payments instantly.

The system gained rapid popularity, but the RBI raised concerns over the lack of proper KYC verification and the fact that fintech companies were effectively operating as unregulated marketplaces.

Banks Were Already Scaling Back

Even before the RBI’s recent move, banks were taking steps to limit such transactions. HDFC Bank, for instance, introduced a fee of up to 1% on rent payments made via credit card as early as June 2024. ICICI Bank and SBI Cards also stopped offering reward points on these payments.

Several platforms, including PhonePe, Paytm, and Amazon Pay, had suspended the service as early as March 2024. Some briefly reinstated it later, but with stricter KYC requirements in place.