Fintech Apps Suspend Rent Payments After RBI Tightens Aggregator Rules

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Fintech firms halt rent payments via credit cards due to RBI’s stricter aggregator rules. Auto-published by Growwh – a smarter way to scale content and marketing. Want to know more? Chat with us. Several leading fintech firms, including PhonePe, Paytm, and CRED, have recently halted rent payment services via their apps. This popular feature allowed consumers to pay rent using credit cards, providing convenience and even credit-building opportunities. However, the decision follows the Reserve Bank of India’s (RBI) revised guidelines for Payment Aggregators (PAs) and Payment Gateways (PGs) issued on September 15. What Prompted the Halt of Rent Payments on Fintech Platforms? The RBI’s updated framework introduces stringent operational requirements for PAs and PGs. A critical rule states: “A PA shall aggregate funds only for the merchant with whom it has a contractual relationship.” This means that payment aggregators can only process transactions for entities that have completed a contractual and KYC relationship with them. Since most landlords do not register as merchants or complete KYC onboarding with these platforms, rent payments through fintech apps no longer comply with the regulatory framework. As a result, major fintech players like PhonePe and CRED have disabled the option to make rent payments using credit cards. The suspension reportedly took effect shortly after RBI’s master direction update, which mandates full due diligence on the landlord’s bank account before enabling such transactions. Operational Challenges Behind the Suspension The revised RBI circular also requires financial apps and payment aggregators to conduct thorough customer verification for every merchant onboarded. Given the vast number of landlords and the difficulty in scaling KYC operations—both costly and complex—fintechs chose to pause services to avoid non-compliance risks. Industry insiders suggest that fintech companies await further clarity and are preparing to engage with RBI officials, who are expected to meet payment industry representatives soon to gather feedback on these new directions. Impact on Fintech Revenue and Customer Experience Rent payments had become a profitable and steady revenue segment for fintech firms. Typical monthly rents paid via apps range between Rs 15,000 and Rs 50,000, with convenience fees of about 1–2% per transaction. These recurring transactions guaranteed a reliable income stream for payment services. With rent payment services suspended, fintech companies may lose this predictable revenue and face challenges in customer retention for their payment products. Ripple Effects on the Lending Ecosystem and Credit Building Besides payment processing, fintech platforms increasingly used rent payment histories as an innovative way to assess creditworthiness, especially for first-time borrowers with little or no formal credit history. Regular rent payments routed through credit cards or digital payment platforms served as a proxy for timely financial behavior, allowing lenders to underwrite new borrowers more confidently. This was particularly valuable for young professionals and recent graduates seeking to build their credit profiles. The suspension of this rent payment feature could therefore have significant impacts on “new-to-credit” customers, making it harder for them to establish reliable credit histories in the absence of other formal borrowing records. Looking Ahead: Industry Response and Regulatory Outlook The RBI’s updated rulebook has also introduced provisions for agent-assisted KYC to ease merchant onboarding. However, implementing such processes at scale remains a challenge. Payment gateways and aggregators are closely monitoring the situation and collaborating with regulators to find a compliant path forward that balances user convenience, operational feasibility, and regulatory compliance. Until further clarity is provided, fintech consumers will need to explore alternative rent payment methods outside credit card-based fintech apps. Summary RBI’s new framework restricts payment aggregators to process funds only for verified merchants with direct contractual ties. Landlords generally lack merchant registration, leading fintechs to suspend rent payment via credit cards. PhonePe, Paytm, and CRED have disabled rent payment options post-regulation update. The decision impacts steady fintech revenue streams and customer credit-building opportunities. Further engagement between RBI and fintechs is expected to refine operational guidelines. Stay tuned as the fintech ecosystem adapts to RBI’s evolving regulations, reshaping how rent payments are made digitally. Source This article was auto-generated as part of a smart content campaign. Curious how we do it? Chat with us to learn more about our content automation systems.

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