RBI Regulates Card-Based Commercial Payments | 16 Feb 2024
Recently, the Reserve Bank of India (RBI) has directed Visa and Mastercard to stop card-based business-to-business payments routed through fintech firms.
- This only affects business payments processed through specific third-party services and does not impact other card transactions.
- A set of fintech firms in India currently operate in a category called Business Payment Service Providers (BPSPs) that enable businesses to use credit cards for payments to suppliers who do not accept cards directly.
- The BPSP then transfers the funds to these suppliers using standard bank channels like NEFT and RTGS, acting as a third party. This is the focal point of regulatory scrutiny.
- This move aligns with the RBI's broader objective of ensuring regulatory compliance within the fintech sector and preventing fraudulent or unauthorised transactions in digital platforms.
Read more: Payment and Settlement Systems in India