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RBI cracking down on P2P credit card transactions

The Reserve Bank of India (RBI) has intensified its oversight on peer-to-peer (P2P) credit card payments facilitated by third-party service providers. This follows the discovery of retail customers utilizing credit cards for rent and tuition fee payments through third-party apps, prompting regulatory action.

Regulatory Norms and Scrutiny:

  • RBI defines credit cards as payment instruments with pre-approved credit limits for purchasing goods/services or withdrawing cash.
  • Funds routed through third-party escrow accounts bypass regulations, attracting regulatory scrutiny.
  • Rent payments are a significant segment under scrutiny for such transactions.

Involvement of Fintechs and Commissions:

  • Fintech companies like CRED, OneCard, and NoBroker offer credit card payment services, charging commissions ranging from 1.5% to 3% in addition to GST.
  • Transactions via third-party intermediaries are considered outside the scope of current licensing, akin to Business Payments Solution Provider (BPSP) transactions.

Compliance and Licensing Issues:

  • Some fintechs operate with Third Party Application Provider (TPAP) licenses from NPCI and seek Payment Aggregator (PA) licenses from RBI.
  • The central bank recently prohibited Visa from offering its BPSP facility to entities not accepting card payments directly, signaling a strict stance on compliance.


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