Major fintech platforms including PhonePe, Paytm, and Cred have put an end to their widely used rent payment service for credit card users. The decision comes right after a new circular issued by the Reserve Bank of India (RBI) on September 15.
This feature had gained quick popularity in recent years, mainly because it allowed tenants to pay rent with a credit card, enjoy the interest-free period, and collect rewards or cashback on such a large recurring expense. Now, with its sudden withdrawal, many users across India are left rethinking how they’ll handle their rent payments.
Key Takeaways
- Service Stopped: PhonePe, Paytm, and Cred no longer support rent payments via credit cards.
- Reason: New RBI guidelines for Payment Aggregators (PAs) and Payment Gateways (PGs).
- The New Rule: PAs can only process payments for merchants who have a direct contract and completed full Know Your Customer (KYC) verification.
- Impact on Users: Tenants lose the ability to earn credit card rewards, cashback, and use the credit-free period for rent payments through these apps.
What the New RBI Guidelines Mean
The Reserve Bank of India, which oversees the country’s financial system, has updated the rules for companies that handle online transactions. These intermediaries, known as Payment Aggregators and Payment Gateways, include well-known apps such as PhonePe and Paytm.
According to the revised guidelines, platforms can no longer process payments for individuals or businesses unless they are officially registered as merchants and have undergone full KYC verification. In the case of rent payments, the landlord is the one receiving the money. But since most landlords are not registered merchants on fintech apps, the transaction falls outside the permitted scope.
This change essentially forces these apps to discontinue the service. The RBI’s intention, at least on paper, is to bring more transparency into the system and reduce the chances of funds being misused in the digital payment space.
Disruption for Tenants
For many tenants, especially in urban areas, paying rent with a credit card through apps like PhonePe or Cred had become second nature. The biggest draw was the ability to earn reward points, air miles, or even cashbacks on what is typically the largest monthly expense. Beyond that, it also helped people manage monthly cash flows by using the 45–50 days of interest-free credit that cards usually provide.
With this option gone from major players, tenants now have fewer choices. The straightforward alternatives include traditional bank transfers like NEFT, RTGS, or IMPS, along with UPI payments. While reliable, these methods don’t bring the same perks.
Some smaller fintech platforms might still offer rent payment services for now, though it remains to be seen whether they can continue without running into compliance issues under the new rules. In other words, tenants may still find a workaround, but it’s probably going to get harder.
FAQs
Q. Why did PhonePe, Paytm, and Cred stop rent payments on credit cards?
A. They stopped the service to comply with new RBI guidelines that forbid payment aggregators from processing transactions for entities (like landlords) who are not fully KYC-verified merchants on their platforms.
Q. Can I still pay my rent using a credit card?
A. You can no longer use major apps like PhonePe, Paytm, and Cred for this. Some property management portals or other smaller fintech platforms might still offer this facility if the landlord is properly registered as a merchant with them.
Q. What was the benefit of paying rent with a credit card through these apps?
A. Users could earn reward points, cashback, or air miles on their credit card spending. It also provided an interest-free credit period, which helped with managing monthly finances.
Q. What are my other options to pay rent digitally?
A. You can use direct bank transfer methods such as NEFT, IMPS, RTGS, or make a direct UPI payment to your landlord’s account.
Q. When did the new RBI rule come into effect?
A. The RBI issued the circular with the revised guidelines on September 15. The fintech companies acted quickly to stop the service to follow the new regulations.
