Image by Steve Buissinne from Pixabay
Mumbai: Payment gateways Visa and Mastercard have temporarily suspend commercial card-based payments made by corporations and small enterprises, following instructions from Reserve Bank of India (RBI).
Employers usually issue commercial credit and debit cards to designated employees for business-related expenses like travel bookings and vendor payments.
Visa has confirmed receiving communication from the RBI instructing to halt of such payments.
The regulator instructed Visa on February 8, to suspend all transactions processed through Business Payment Solution Providers (BPSP) until further notice. Additionally, the RBI has requested details regarding the involvement of BPSP in commercial and business payments. “Visa received a communication from the RBI on Thursday, February 8 in what appears to be an industry-wide request for information on the role of business payment solution providers (BPSPs) in commercial and business payments. That communication included the direction that we hold all BPSP transactions in abeyance,” the company said in a statement.
Visa further mentioned that it was in talks with the RBI and BPSPs regarding the matter.
Mastercard hasn’t issued any statement yet.
Though the exact reason is not known, the ET reported quoting industry sources, that low of money through the card route towards non-KYC-ed merchants might have irked the regulator. While their bank accounts might be KYC-ed but they are mostly not authorised to accept card payments as merchants.
Founder of a fintech startup has also received the notice to pause business payments made by commercial cards. Some fintechs are also looking to stop these transactions due to RBI’s recent instructions. Rental and tuition payments might also be impacted by the move. Consumers can now make rental payments via their cards through apps like Cred, Paytm and NoBroker, the report added.
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