Fintech firms such as PhonePe, Paytm, and CRED, have pulled the plug on rent payment services through their apps. The servuce had been a popular choice among consumers to use credit cards in recent years.
The move follows the Reserve Bank of India’s (RBI) stricter rules for Payment Aggregators (PAs) and Payment Gateways (PGs), issued on September 15. The revised framework specifically prevents PAs from processing payments for businesses without a direct contractual arrangement.
The RBI circular stated: “A PA shall aggregate funds only for the merchant with whom it has a contractual relationship.” This rule effectively limits rent payments made through fintech platforms, as landlords are usually not registered merchants who have undergne the required KYC process with the app.
As a result, major apps such as PhonePe and CRED have disabled credit card-based rent payments. Sources familiar with the matter said the services were suspended soon after the RBI released its updated master directions, which now mandate that apps complete full due diligence on a landlord’s bank account before enabling credit card transactions.
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The guidelines require aggregators to conduct proper customer verification for every merchant onboarded, as a result redoing KYC at scale would be both costly and operationally difficult, making suspension of the service the safer option for now.
The central bank is expected to meet with payment industry representatives soon to gather feedback on these directions.
High-value rent payments, typically ranging from Rs 15,000 to Rs 50,000 a month, had turned into a profitable segment for fintech firms, which levied convenience fees of 1–2%. It also predictable and recurring revenue.
The suspension of rent payment services is likely to ripple into the lending ecosystem, particularly for financial institutions targeting first-time borrowers. Over the past few years, fintech platforms had positioned timely rent payments as a reliable proxy for creditworthiness, especially for customers with limited or no prior credit history.
By routing rent through credit cards or digital platforms, individuals were able to build a track record of regular repayments, which lenders could then factor into underwriting decisions. This could make it harder for “new-to-credit” customers—such as young professionals or recent graduates—to establish their reliability in the absence of other formal borrowing history.
