The Reserve Bank of India’s (RBI) latest regulatory changes have shaken up the digital payments ecosystem, particularly impacting tenants who relied on fintech platforms like PhonePe, Paytm, and Cred to pay rent via credit cards. With the new restrictions, these platforms have discontinued credit card-based rent payment services, forcing many to return to traditional methods such as bank transfers or cheques.
In recent years, paying rent through credit cards emerged as one of the fastest-growing use cases for digital transactions in India. Tenants preferred this mode of payment as it offered multiple benefits:
Reward points and cashback from card issuers.
Interest-free credit periods, allowing better cash flow management.
The convenience of digital payments over handling cash or cheques.
This ecosystem was largely driven by fintech apps that connected tenants and landlords seamlessly. However, this convenience is now facing a major disruption due to RBI’s new norms.
On September 15, 2025, the RBI issued a circular tightening rules for payment aggregators (PAs) and payment gateways (PGs).
According to the revised framework:
PAs and PGs can only process transactions for merchants with whom they have a direct contractual relationship.
Merchants must undergo full KYC verification to be eligible.
Transactions involving entities not formally registered as merchants, such as landlords, cannot be processed through fintech apps.
This effectively means that rent payments to landlords—who are typically not registered merchants—can no longer be routed via credit cards on fintech apps.
Even before RBI’s intervention, several banks had begun restricting such payments:
HDFC Bank introduced a 1% fee (capped at ₹3,000 per transaction) on credit card-based rent payments in June 2024.
ICICI Bank and SBI Cards discontinued reward points for rent payments made via credit cards.
Since March 2024, many fintechs including PhonePe, Paytm, MobiKwik, Freecharge, and Amazon Pay had either suspended or restricted rent payment services, resuming them only with stricter compliance norms.
These developments hinted at an increasing regulatory push toward aligning rent payments with conventional banking frameworks.
The withdrawal of credit card rent payment services has created multiple challenges:
Tenants: Lose access to the rewards, cashback, and credit flexibility they previously enjoyed. Urban renters, who form a large segment of credit card users, will be most affected.
Fintech platforms: Lose a fast-growing transaction category that attracted regular, high-value payments. This could impact user engagement and revenue streams.
Landlords: May face delays and inconvenience as tenants shift back to traditional payment modes like NEFT, IMPS, UPI transfers, or cheques.
With fintech apps halting services, many tenants will now have to rely on:
Direct bank transfers (NEFT/IMPS/RTGS).
UPI-based transactions where possible.
Traditional cheques and cash payments, particularly in cases where landlords prefer offline methods.
While these modes are reliable, they lack the perks and flexibility offered by credit cards, reducing the overall appeal for tech-savvy renters.
The fintech industry may look for alternative solutions in response to RBI’s tightening rules:
Some platforms may develop merchant-onboarding frameworks for landlords, though large-scale adoption may be challenging.
Banks and regulators may collaborate on specialised rent payment products, striking a balance between compliance and convenience.
Tenants may gradually shift to digital loan products or credit-linked UPI options as replacements for card-based rent payments.
For now, the RBI’s decision signals a decisive move towards stronger compliance and risk management in India’s fintech sector.
Conclusion
The discontinuation of credit card-based rent payments by fintech platforms like PhonePe, Paytm, and Cred reflects the growing regulatory scrutiny on India’s digital payments ecosystem. While the move aims to strengthen compliance and ensure financial transparency, it also disrupts a popular service for millions of urban tenants. Going forward, fintech players may need to innovate within RBI’s regulatory boundaries to continue catering to this significant use case.