The Reserve Bank of India (RBI) has directed major card networks Visa and Mastercard to pause transactions involving card-based payments for commercial services like rent or vendor payments that are processed through third-party fintech companies, according to Reuters.

This directive, as informed by sources close to the matter, is aimed specifically at transactions facilitated by a niche sector within fintech known as business payment solution providers (BPSPs). These providers enable merchants to accept card payments indirectly, a service for which they charge a fee.

The decision by the RBI, the details of which were not publicly disclosed, is understood to only affect a subset of corporate card transactions that are executed via these fintech intermediaries, leaving the broader landscape of corporate card payments untouched. This clarification comes amidst concerns over the potential scope of the central bank’s restrictions.

Visa has confirmed receiving communication from the RBI on 8 February, indicating that this move is part of a broader inquiry into the operational roles of BPSPs in the ecosystem of commercial and business payments.

The communication from the RBI instructed Visa to temporarily suspend all transactions involving BPSPs, a mandate that Visa has indicated it is actively complying with, along with ongoing engagements with the RBI and relevant stakeholders to ensure adherence to regulatory standards.

Mastercard has yet to make a public response regarding the directive from the RBI. Similarly, the RBI has not provided comments in response to inquiries about this development.

Featured image credit: Edited from Freepik

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