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The Reserve Bank of India cracked down on certain fintechs and asked payment networks VISA and Mastercard to halt credit card payments. Later, they clarified that a Card Network had entered into arrangements without RBI approval. The podcast discusses the impact of the RBI's actions on business payment service providers and non-licensed credit card transactions. It also mentions issues with KYC norms and potential problems with businesses using credit cards to pay rent.
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- The RBI has cracked down on certain Fintechs operating as Business Payment Service Providers (BPSP) due to non-compliance with legal regulations and concerns regarding KYC compliance and credit card misuse for merchant transactions.
- The RBI's action highlights the need for proper regulatory oversight and compliance in the BPSP industry, particularly in relation to KYC norms and the licensing of payment systems.
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RBI Crackdown on Fintechs
The RBI has initiated a crackdown on certain Fintechs, specifically those operating as Business Payment Service Providers (BPSP). These BPSPs enable businesses to pay suppliers using credit cards, even if the supplier does not have the infrastructure to accept credit card payments. However, the RBI has clarified that this practice does not have legal sanction as per the Payment and Settlement Systems Act of 2007. The RBI has asked card networks, likely Visa, to block all commercial credit card transactions conducted by BPSPs. This move has potentially halted the business operations of BPSPs and raised questions about regulatory oversight and compliance.
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