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RBI's Crackdown: Card Networks' Tie-Ups with Payments Intermediaries Under Scrutiny

RBI's latest directive targets card networks' tie-ups with payments intermediaries, raising concerns about compliance and regulatory oversight in the fintech ecosystem. Learn about the implications and challenges for businesses

The Reserve Bank of India (RBI) has intensified its regulatory oversight on card networks Visa and Mastercard, instructing them to suspend commercial card-brd business payments. Following this, the central bank issued a new directive targeting card networks' tie-ups with payments intermediaries.

RBI's Circular and Directive:

In a circular dated February 15, the RBI ordered an unnamed card network to suspend all card-brd business payments facilitated through payments intermediaries to entities not accepting card payments. This move comes amidst concerns raised by the RBI regarding such arrangements, prompting a detailed examination of the matter.

Business Payments Solutions Providers (BPSPs) Arrangement:

Under the arrangement, BPSPs or intermediaries accept card payments from corporates for business transactions and transfer the funds to non-card accepting recipients via IMPS/RTGS/NEFT. This special arrangement, initiated by Visa and Mastercard, aimed to enhance the acceptance of credit cards for business transactions, particularly commercial or corporate credit cards.

RBI's Scrutiny and Concerns:

The RBI is scrutinizing these arrangements to ensure compliance with regulatory requirements. Concerns include the legitimacy of transactions, potential risks of round-tripping or money laundering, and adherence to the Payment and Settlement Systems (PSS) Act, 2007. The central bank highlighted issues related to fund pooling, transaction information requirements, and the absence of necessary approvals.

Impact on Fintech Ecosystem:

The RBI's consecutive directives have disrupted operations within the fintech ecosystem. Companies like Paytm Payments Bank, EnKash, and Paymate have reportedly been affected by the regulatory measures. The broader implications of these directives underscore the challenges faced by the fintech industry amidst regulatory scrutiny.


As the RBI intensifies its oversight on card networks and payments intermediaries, the fintech ecosystem faces increasing regulatory pressure. Compliance with regulatory requirements and transparent business practices are crucial for navigating the evolving regulatory landscape.