Customers using fintech platforms like Cred and PhonePe to pay their credit card bills will face disruptions starting July 1. Major banks such as Axis Bank, HDFC Bank, and ICICI Bank, which collectively have issued over 50 million credit cards, have yet to comply with the Reserve Bank of India’s (RBI) new mandate requiring credit card bill payments to be processed through the Bharat Bill Payment System (BBPS).
This non-compliance will render credit card payments through these platforms unavailable after June 30.
Impact on Fintech Platforms
The latest RBI regulation affects major fintech companies, including PhonePe, Cred, BillDesk, and Infibeam Avenues. Despite these platforms being members of the BBPS, they will be unable to process credit card payments if the issuing banks do not meet the new compliance requirements. The regulation, effective from July 1, aims to streamline and centralize the payment process for better oversight and fraud prevention.
RBI’s Directive for Centralised Payments
The RBI has mandated that all credit card payments be routed through the BBPS by June 30. This directive requires banks to enable BBPS compliance to continue offering seamless payment services through fintech platforms. Currently, only eight out of 34 authorized credit card-issuing banks have met the BBPS compliance requirements. These compliant banks include Federal Bank, Kotak Mahindra, IndusInd Bank, SBI Card, and BoB Card.
Industry Requests for Extension
To ensure smooth operations, the payments industry has requested a 90-day extension to the deadline. The CEO of a major payments company highlighted the need for additional time for all banks to achieve compliance. The current lack of readiness among major banks threatens to disrupt the payment services provided by fintech platforms, affecting millions of customers.
Reason Behind RBI’s Centralisation Requirement
The RBI’s decision to centralize credit card bill payments through the BBPS is driven by a need to enhance oversight and prevent fraudulent activities. Centralization allows the RBI to gain better insights into payment patterns and more effectively regulate the industry. By requiring all credit card transactions to be processed through a centralized system, the RBI aims to ensure greater security and transparency in the payment process.
