The Reserve Bank has recently issued directives to leading international payment giants Visa and Mastercard, urging them to cease processing commercial payments made by both small and large enterprises. This move comes as a response to concerns regarding compliance with Know Your Customer (KYC) regulations.
Visa has confirmed receipt of the communication from the regulator on February 8, while awaiting a response from Mastercard on the matter.
This development closely follows the RBI's initiation of regulatory measures against Paytm Payments Bank.
Industry insiders suggest that the RBI's instructions to Visa and Mastercard stem from worries about their failure to adhere to KYC norms. The temporary cessation of transactions conducted at non-authorized business establishments capable of accepting commercial card payments has been mandated.
In a statement to PTI, a spokesperson for Visa India disclosed, “they have 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 direction that we hold all BPSP transactions in abeyance.”
Visa emphasized that BPSPs operate under RBI regulation and licensing per the PA-PG (Payment Aggregators – Payment Gateways) guidelines. The company assured ongoing engagement with the RBI and ecosystem partners to ensure compliance. Moreover, Visa emphasized that BPSPs, rather than themselves, could provide further clarification on the matter.
According to industry insiders, certain fintech companies have also been instructed by the RBI to pause commercial card-based business payments until further notice. There are concerns that this suspension may also affect rental and tuition fee payments. Currently, fintech platforms such as Cred, Paytm, and Nobroker facilitate such payments through commercial, credit, and debit cards.
It's worth noting that businesses primarily conduct their transactions via net banking/NEFT or RTGS for larger transfers, which are now available round the clock. Fintech players like Enkash and Paymate enable the processing of payments through commercial cards for various business requirements such as vendor and supplier payments.
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