RBI Directs Visa and MasterCard to Halt Corporate Card Payments, Fintechs React
The Reserve Bank of India (RBI) has instructed card networks Visa and MasterCard to cease card-based commercial payments made by corporations and small enterprises, sparking reactions from fintech founders.
According to a fintech startup founder who received the notice, there’s been a directive to pause business payments conducted via commercial cards until further notice. This move could potentially impact transactions such as rental and tuition fees, prompting some fintech companies to consider halting those transactions as well.
For rental payments, consumers have alternative options like Paytm, No Broker, and Cred. Another fintech founder expressed the belief that there will likely be a review process, with the industry expected to make representations to the RBI. While acknowledging concerns over rental payments, they argue that vendor payments are typically routed through established banking channels, which ideally should still be permitted.
The rationale behind RBI’s directive appears to stem from concerns about money flowing through card routes to non-KYC-linked merchants, a situation that has drawn the ire of regulators. While these merchants may have KYC-linked bank accounts, they lack authorization to accept card payments.
Against the backdrop of the RBI’s recent stringent actions against Paytm Payments Bank, fintech founders are prepared to fully cooperate with the regulatory measures.
