After the action on Paytm, RBI has given a big blow to bank card payment gateways Visa, MasterCard, Amex and Diners. RBI has recently banned comp.es from making payments to vendors using commercial cards. However, why has the Reserve Bank imposed this restriction? No clear information has been found about this. According to media reports, the Reserve Bank has found that such traders are being paid through the cards of these comp.es. Those who do not have KYC, but still take card payment.
Suspicion of fraud and money laundering
RBI also suspects fraud and money laundering in some large transactions. The bank has also taken action against Paytm due to similar allegations. Transactions from Paytm Bank have been stopped from March 1. Currently, the UPI payment platform is facing investigation by ED.
Why did RBI impose the ban?
The reason behind RBI taking this step is that the regulator is concerned about the transactions done by small traders who do not follow KYC. The founder of the fintech startup said on condition of anonymity. Fintech comp.es operating in this sector have been ordered to stop business payments through commercial cards until further orders. Rent and tuition payments may be affected following the move.
Facility to pay rent also
After this, some fintech comp.es may have to consider suspending such transactions. Actually, apps like Cred, Paytm and NoBroker allow customers to pay the fare through card. Businesses generally make payments through net banking or RTGS such as bulk transfers from RBI, except for fintechs and card networks that have developed payment processes to merchant vendors through cards. Card payments are not commonly used in this area. Fintech vendors like Encash and PayMate provide payment features tailored to business needs like vendor and supplier payments.
