Days after crackdown against Paytm and Visa, the Reserve Bank of India is now focusing on the ‘peer-to-peer’ credit card payments. According to a report by the Hindu Business Line, the central bank has increased the scrutiny of such third-party service providers. Usually fintechs, such P2P lending platforms are facilitating the payments by retail customers using credit cards.
In simpler terms, this means the current norms say that an individual is not allowed to make her/his rent payments to her/his landlords unless the landlord has a merchant payment account. But these P2P platforms are allowing credit card payments. This means that third party apps are being used by retail customers to pay rents or their tuition fees, the Hindu Business Line report added.
Quoting a senior official, who was not named, the report further said that funds being routed via third party apps via an ‘escrow account’ is a clear bypassing of current norms, which will not be allowed.
The latest fintech players that will be on RBI radar include companies such as NoBroker, Cred and OneCard. These fintechs allow such third party payments. Rent can only be paid using credit cards when housing societies have a merchant bank account.
These fintech platforms charge commission of 1.5-3 per cent on such payments apart from the usual GST. According to a MoneyControl report, the RBI had also sent out a letter to all fintechs regarding KYC among other things. According to Moneycontrol, the central bank had sent emails to several platforms, requesting details regarding their onboarding procedures, customer profiles, agreements with lenders, IT systems, and other pertinent information. This encompasses data on filed returns, assets under management, and financial records.