After the action on Paytm, the Reserve Bank has given a big blow to card payment gateways such as Visa, Master Card. The Reserve Bank of India (RBI) has recently banned payments made by companies to vendors using commercial cards. The RBI is also suspecting fraud and money laundering on some large transactions.
After the action on Paytm, the Reserve Bank has given a big blow to card payment gateways such as Visa, Master Card, Amex and Diners. The Reserve Bank of India (RBI) has recently banned payments made by companies to vendors using commercial cards. However, it is not clear why the Reserve Bank of India (RBI) imposed the restrictions. According to the media report, the Reserve Bank has found that payments were being made from the cards of these companies to merchants who do not have KYC, but still take payment through the card.
Suspicion of fraud and money laundering
The RBI is also suspecting fraud and money laundering on some large transactions. Let us tell you that due to similar allegations, action has also been taken by the bank on Paytm. Paytm Bank transactions have been stopped since March 1. The UPI payment platform is currently under the ED’s scanner.
Why did the RBI ban it?
The reason behind the RBI’s move is believed to be that the regulator is concerned about transactions through small traders who do not follow KYC. The founder of a fintech startup, on condition of anonymity, said fintechs operating in the sector have been ordered to stop business payments made through commercial cards until further orders. After this step, the payment of rent and tuition can be affected.
Rent payment facility also available
After this, some fintechs will have to consider suspending such transactions. In fact, apps like Cred, Paytm and NoBroker allow customers to pay rent through cards. Usually, businesses make payments through net banking or bulk transfers from the RBI, such as RTGS.
Except for fintech and card networks, which have developed the process of making payments to business vendors through cards. Card payments are not commonly used in this sector. Fintech vendors and suppliers, such as Encash and PayMate, offer payment options based on business needs, such as payments.
