RBI’s New Rules Disrupt Credit Card Rent Payments on PhonePe, Paytm, and CRED
A day after the Reserve Bank of India (RBI) issued updated master directions for payment aggregators (PAs), major fintech platforms like PhonePe, Paytm, and CRED have reportedly suspended rental payments via credit cards on their apps. This sudden move has caught many users off guard, especially those who rely on credit cards to manage monthly rent payments.
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According to a report by the Economic Times, the halt in services stems from regulatory concerns around KYC compliance and the evolving definition of marketplace operations under the new RBI guidelines. Many landlords receiving rent payments through these platforms are not formally onboarded as merchants with complete Know Your Customer (KYC) documentation. As a result, the platforms were technically acting as marketplaces for these landlords, which is no longer permitted under the revised norms.
The RBI’s new mandates clearly state that payment aggregators can only process transactions for merchants with whom they have a formal, contractual relationship. This is a shift from earlier practices where aggregators could facilitate payments even without direct merchant ties, as long as the transactions were legitimate and secure.
Furthermore, the RBI has now prohibited PAs from engaging in any form of “marketplace business”, meaning they can no longer act as intermediaries between customers and non-KYC-compliant beneficiaries, such as landlords. This regulatory tightening is part of a broader push to streamline digital payments, reduce fraud, and improve traceability across financial platforms.
A senior industry insider, speaking to ET, explained:
“For such transactions (rental payments), the RBI wants payments to be routed through channels like BBPS (Bharat Bill Payment System). And if one qualifies as a marketplace, the way it is defined in the new circular… it will need to make changes to ways of operation, which is a big ask.”
This clarification suggests that BBPS—a fully regulated and standardized bill payment platform under NPCI—may soon become the preferred (or mandatory) route for rent payments in the future.
While the move is expected to improve compliance and transparency, it has sparked inconvenience among users who frequently use their credit cards for rent payments to earn rewards, optimize cash flow, or meet spending thresholds. The decision also impacts fintechs that had built a sizable user base and business model around such high-volume, recurring payments.
For now, users looking to pay rent via credit card will either need to wait for platforms to comply with the new norms or explore BBPS-compliant alternatives. Industry experts believe that fintechs may pivot their operations to align with RBI’s framework, though this will require significant operational and technological changes.
As digital finance continues to evolve in India, regulatory compliance is taking center stage, shaping not only the way companies operate but also how consumers interact with financial products.
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