• Source:PTI
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RBI Action on VISA and Mastercard:  In a harsh move, the Reserve Bank of India asked Visa and MasterCard, major international payment providers, to halt card-based commercial payments for small and large businesses due to concerns over KYC compliance.

Visa acknowledged communication in this regard from the regulator on February 8, MasterCard did not issue any comment about the RBI's order so far.

The development comes after RBI initiated regulatory proceedings against Paytm Payments Bank. According to industry sources, RBI guidelines have been issued for Visa and MasterCard due to non-compliance with KYC norms.

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Transactions at merchant outlets, which are not authorized to accept commercial card payments have been asked to be suspended.

"they received a communication from the RBI on February 8 in what appears to be an industry-wide request for information on the role of business payment solution providers (BPSPs) in commercial and business payments. That communication included the direction that we hold all BPSP transactions in abeyance," a Visa India spokesperson told PTI.

Visa added that BPSPs are regulated and licensed by RBI as per PA-PG (Payment Aggregators - Payment Gateways) guidelines.

"We are proactively engaged and continue to be in discussions with the RBI and our ecosystem partners to ensure compliance,"
said Visa.

According to industry sources, some fintech companies have also received orders from the RBI to stop merchant payments through business cards until further notice.

Following the action, fear is there that rent and tuition fees may also be affected once the facility is discontinued. Currently, fintechs like Cred, Paytm and Nobroker allow payment of rent and tuition fees through commercial, credit and debit cards.

It is observed that companies are mostly making their business payments through Net Banking/NEFT or RTGS now for larger transactions.

(With PTI Inputs)

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