Now Visa, MasterCard have stopped business payments through commercial cards after RBI directive.
In a surprising move, reserve Bank of India (RBI) has directed card networks like visa And master card Blocking card-based commercial payments made by corporations and small enterprises. Accepting transactions made at potentially unauthorized merchant outlets card payment According to industry sources, has been temporarily suspended.
While the exact reason behind this directive is not clear, it is believed that the regulator is concerned about the flow of funds through non-KYC-ed merchants who are not authorized to accept card payments, an ET source said. The report said.
The founder of a fintech startup, who wished to remain anonymous, revealed that fintech companies operating in the sector have been instructed to halt commercial payments. commercial card until further notice. The founder also noted that the move could impact rental and tuition payments, causing some fintechs to consider suspending those transactions as well. Apps like Cred, Paytm and NoBroker allow consumers to pay fares through their cards.
Queries sent to Visa and MasterCard have not yet received any response.
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Typically, businesses make payments through net banking or bulk transfers managed by the RBI, such as RTGS (Real Time Gross Settlement). Card payments are not commonly used in the region, except for fintechs and card networks that have developed processes for paying merchant vendors via cards. Fintechs like Encash and PayMate facilitate payments through commercial cards for business needs like vendor and supplier payments.
Ajay Adiseshan, CEO of PayMate, a major player in the merchant payments sector backed by Visa, confirmed that the instructions had come to the card networks from the regulator, who then informed the industry. Adiseshan assured that although they have temporarily halted their operations in compliance with the guidelines, they have made alternative arrangements to ensure that business payments are not disrupted.
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Although the industry is stunned by the move, the exact reason for the regulatory action is unknown. Some speculate that this may be related to payment aggregator guidelines
If the card networks were working with players that have not received in-principle approval from the RBI for payment aggregator licenses, it could be a regulatory issue. Others believe the scrutiny may be due to fintech platforms that allow consumers to use their cards to pay for tuition fees and rent. Since these users are not authorized to accept card payments, this can be seen as a means of withdrawing cash from the debit card without following proper instructions.
While the exact reason behind this directive is not clear, it is believed that the regulator is concerned about the flow of funds through non-KYC-ed merchants who are not authorized to accept card payments, an ET source said. The report said.
The founder of a fintech startup, who wished to remain anonymous, revealed that fintech companies operating in the sector have been instructed to halt commercial payments. commercial card until further notice. The founder also noted that the move could impact rental and tuition payments, causing some fintechs to consider suspending those transactions as well. Apps like Cred, Paytm and NoBroker allow consumers to pay fares through their cards.
Queries sent to Visa and MasterCard have not yet received any response.
Read this also Paytm, Byju’s employees looking for jobs! Nearly 13,500 are actively looking for new jobs amid challenges
Typically, businesses make payments through net banking or bulk transfers managed by the RBI, such as RTGS (Real Time Gross Settlement). Card payments are not commonly used in the region, except for fintechs and card networks that have developed processes for paying merchant vendors via cards. Fintechs like Encash and PayMate facilitate payments through commercial cards for business needs like vendor and supplier payments.
Ajay Adiseshan, CEO of PayMate, a major player in the merchant payments sector backed by Visa, confirmed that the instructions had come to the card networks from the regulator, who then informed the industry. Adiseshan assured that although they have temporarily halted their operations in compliance with the guidelines, they have made alternative arrangements to ensure that business payments are not disrupted.
Read this also Paytm Payments Bank ban: From Paytm migration to RBI’s stance – Top 10 facts and developments you should know
Although the industry is stunned by the move, the exact reason for the regulatory action is unknown. Some speculate that this may be related to payment aggregator guidelines
If the card networks were working with players that have not received in-principle approval from the RBI for payment aggregator licenses, it could be a regulatory issue. Others believe the scrutiny may be due to fintech platforms that allow consumers to use their cards to pay for tuition fees and rent. Since these users are not authorized to accept card payments, this can be seen as a means of withdrawing cash from the debit card without following proper instructions.
