RBI, new regulation for Visa, MasterCard

RBI's strict action is increasing. After recently taking action against 'Paytm Payments' bank, now it is going to take strict action against companies issuing corporate cards or business cards.

New Regulation for Fintech Firms

As a result, fintech companies are in a quandary about their position.

RBI has directed Visa and MasterCard to stop accepting payments through commercial cards.

According to industry sources, the Reserve Bank has taken this step to stop card payments to merchants who do not comply with KYC rules.

Following RBI's intimation, Visa, MasterCard companies, KYCs have temporarily suspended their services to all non-compliant merchants and business outlets.

However, for this announcement to come Visa said that any pre-authorized transaction will be processed as per existing procedures.

Although the reasons for this action are not clear, it is said that the RBI has taken this decision with the aim of avoiding card payments to merchants who do not follow the KYC rules.

Even though bank accounts of such merchants have been opened in accordance with KYC rules, they may not be authorized to receive card payments.

How business cards are used

Business cards are used to pay for business trips and other expenses incurred by employees on behalf of the company, not from their own money, but through credit cards issued by the company. Also for other business purposes, transaction is done through it. Companies like 'Encash, Paymate' are providing such service.

In this regard, one of the founders of the financial technology company said,

Generally, before the advent of fintech companies, merchants used to transact their business from their bank account through netbanking RTGS, or through NetBanking. No card payment.

But after the arrival of financial technology companies, they started paying through business cards.

Fintech companies involved in making these types of payments have been advised to stop their activities until further notice.

Due to this, payment of rent etc. by traders will also be affected. Regulations on financial technology companies are also being tightened. Not so good for business growth.

Said this.