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RBI Payment Aggregator Directions Hit Card Rent Payments

20 September 20251 min read
BANKING & FINANCERBI PaymentAggregatorDirections Hit CardRent Payments20 September 2025safalsetu.com

Why in the news

After RBI’s revised Master Direction on payment aggregators (PAs), PhonePe, Paytm and Cred stopped credit-card rent payments.

What changed

  • Merchant-only: funds pooled only for directly contracted merchants; rent to landlords not registered as fully KYC-verified merchants is barred.
  • No marketplace model: PAs only facilitate payments for onboarded merchants.
  • Due diligence: the PA, not the acquiring bank, checks KYC and settles only into the merchant’s bank account.

Why RBI acted

  • Rent via cards worked like disguised P2P transfers; fake rent payments could be used for cash flow or illicit transfers.
  • Firmer traceability; one unified PA licence under a principle-based framework.

Impact

  • Fintechs: lose a fast-growing use case and fee income; re-onboarding landlords is costly.
  • Users: no rewards or cashback on rent; use bank transfer, UPI, cheque or BBPS.

Exam angle

  • PA: facilitates digital payments between merchants and customers without merchants building their own infrastructure.
  • Full merchant KYC strengthens anti-money laundering safeguards.

Test yourself

1. Under RBI's revised Master Direction, who must verify merchant KYC?

PAs, not acquiring banks, are now directly responsible for merchant KYC.

2. Which activity did RBI's 2025 PA Master Direction effectively stop fintechs from offering?

Rent payments via credit cards were stopped by PhonePe, Paytm and Cred.

3. Under the new PA norms, payments must be settled into which account?

Funds must settle only into the onboarded merchant's bank account.

This topic is part of Daily Current Affairs 19 September 2025 (11 topics).

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