Home   »   Banking Current Affairs 2023   »   RBI Directs Visa and Mastercard to...

RBI Directs Visa and Mastercard to Halt Commercial Card Payments: Compliance Concerns

The Reserve Bank of India (RBI) has instructed Visa and Mastercard to cease card-based commercial payments by businesses, citing concerns over Know Your Customer (KYC) compliance. This directive extends to transactions made by both small and large enterprises, with a focus on ensuring adherence to regulatory norms.

Regulatory Intervention and Industry Response

  • RBI’s directive follows regulatory actions against Paytm Payments Bank and concerns over KYC non-compliance.
  • Visa has acknowledged receiving communication from the RBI on February 8, indicating a broader industry request for information regarding the role of Business Payment Solution Providers (BPSPs) in commercial payments.
  • Mastercard’s response to the directive is pending.

Impact on Business Payment Ecosystem

  • Transactions made at unauthorized business outlets are to be temporarily halted, affecting various sectors relying on commercial card payments.
  • Fintech companies, including Cred, Paytm, and Nobroker, which facilitate rental and tuition fee payments through commercial cards, are likely to be impacted.
  • The suspension of this facility may also affect essential business operations such as vendor and supplier payments.

Industry Engagement and Compliance Efforts

  • Visa asserts proactive engagement with the RBI and ecosystem partners to ensure compliance with regulations.
  • Fintech players such as Enkash and Paymate, which process business payments through commercial cards, are also subject to the RBI’s directive.

 

RBI Directs Visa and Mastercard to Halt Commercial Card Payments: Compliance Concerns_4.1

 

 

RBI Directs Visa and Mastercard to Halt Commercial Card Payments: Compliance Concerns_5.1

TOPICS: