Visa, Mastercard customers take note: RBI asks payments giants to stop card-based commercial payments

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Mumbai: In a major move, the Reserve Bank of India (RBI) has asked international payments giants Visa and Mastercard to stop card-based commercial payments made by small and large businesses due to concerns over KYC compliance. Visa has already replied to RBI’s order, a response from Mastercard was awaited.

The RBI’s latest order comes after it passed an order on January 31, 2024 initiating regulatory actions against Paytm Payments Bank and barred the fintech from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, among others after 29 February 2024.

Reports stated that the central bank’s order was issued due to concerns over non-compliance with KYC norms.

The RBI has asked the international payments giants to temporarily halt the transactions done at other business outlets which may not be authorised to accept commercial card payments.

While confirming about the RBI’s directions, a Visa India spokesperson told PTI that “they have received a communication from the RBI on February 8 in what appears to be an industry-wide request for information on the role of business payment solution providers (BPSPs) in commercial and business payments. That communication included direction that we hold all BPSP transactions in abeyance.” Visa further said that BPSPs are regulated and licensed by the RBI under the PA-PG (payment aggregators – payment gateways) guidelines. “We are proactively engaged and continue to be in discussions with the RBI and our ecosystem partners to ensure compliance.” The US company also said more clarity could be offered by BPSPs and not them.

Meanwhile, the news agency quoted some sources saying that the RBI has also asked some fintechs to pause business payments made by commercial cards until further notice.

There is a fear amongst the fintechs that RBI may halt rental and tuition payments services. Cred, Paytm and Nobroker allow rent and tuition fee payments through commercial, credit and debit cards. Other fintechs, Enkash and Paymate allow process payments made through commercial cards for business needs like paying vendors and suppliers.

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