PhonePe, Paytm, Cred Shut Down Rent Payment Services After RBI Tightens Rules
PhonePe, Paytm, Cred Shut Down Rent Payment Services After RBI Tightens Rules
RBI’s new framework bars payment aggregators from facilitating transactions with unregistered landlords, ending credit card rent payments via fintech apps.
India’s largest fintech platforms including PhonePe, Paytm, and Cred have discontinued rent payment services on their apps after the Reserve Bank of India (RBI) tightened rules governing Payment Aggregators (PAs) and Payment Gateways (PGs).
The RBI’s circular issued on September 15 states that “a PA shall aggregate funds only for the merchant with whom it has a contractual relationship. PA business shall not carry out marketplace business.” This effectively prevents PAs from processing rent payments where landlords are not onboarded merchants with proper KYC compliance.
For users, rent payments through credit cards had become one of the fastest-growing fintech categories in recent years. The appeal lay in benefits such as:
- Earning cashback or reward points
- Managing cash flow by converting rent into EMIs
Fintechs also gained from the model by charging convenience fees and driving up card spends. But regulators were concerned about misuse of credit cards for peer-to-peer transfers, gaps in KYC, and weak oversight of such flows.
Several banks had already begun tightening rules earlier this year. HDFC Bank informed its credit card customers in June that rent payments through fintech apps would attract a 1 percent fee up to ₹3,000 per transaction. ICICI Bank and SBI Cards had also withdrawn reward points for rent payments in March and April 2024.
By March 2024, platforms like PhonePe, Paytm, Mobikwik, Freecharge, and Amazon Pay had paused rent payments via credit cards. Some resumed later after adding stricter compliance checks, but the new RBI directive has now forced a complete shutdown of the category.
Impact for Users
Tenants will no longer be able to pay monthly rent through these apps using credit cards. Instead, they must rely on traditional channels such as bank transfers, UPI, or cheques.
Impact for Fintechs
The move ends a lucrative business line that delivered large transaction volumes and convenience fee revenue. Reintroducing the service would require onboarding landlords as registered merchants with full KYC, a process that could be time-consuming and unattractive for casual landlords.
The RBI’s action is part of its broader push to strengthen compliance in digital payments, reduce fraud risks, and ensure tighter oversight of money flows.
