The Reserve Bank of India (RBI) has introduced new rules that have ended the option of paying house rent through credit cards on fintech apps like PhonePe, Paytm, and Cred. This move forces tenants to rely on conventional payment methods such as bank transfers, UPI, or checks.
What Changed Under RBI’s New Guidelines?
Under the latest directive, stricter regulations have been placed on payment aggregators and gateways. As per these rules:
- A payment aggregator can only process transactions for merchants with whom they have a direct agreement.
- Funds from transactions can only be transferred to merchants who have completed full KYC verification.
- Marketplaces cannot collect payments for sellers who are not officially onboarded on their platforms.
Since landlords are generally not listed as merchants on these apps, rent payments through credit cards have been discontinued.
Why Was Credit Card Rent Payment Popular?
For tenants, paying rent via credit cards offered two major advantages—earning reward points and enjoying cashback deals. Fintech companies, on the other hand, generated considerable revenue from convenience fees charged on such transactions. Even banks benefited from higher card spending volumes.
However, the RBI considered this model risky due to loopholes around KYC and misuse of the system, prompting the recent restrictions.
Previous Developments Before the Ban
The tightening of norms did not happen overnight.
- In mid-2024, HDFC Bank introduced an additional fee of 1% on rent payments made through credit cards.
- Around the same time, ICICI and SBI Cards removed the benefit of reward points for such payments.
- Fintech platforms including PhonePe, Paytm, and Amazon Pay paused their credit card rent payment feature for some time before selectively reviving it with stricter KYC checks.
With RBI’s latest notification on September 15, 2025, the rules have been made clear: rent transactions will only be valid if landlords are registered as merchants with complete verification, a process impractical for most housing arrangements.
Impact on Tenants and Landlords
For millions of users, this means the end of a convenient, reward-friendly payment method. Tenants will now have to fall back on traditional options such as NEFT, IMPS, UPI transfers, or issuing checks. Additionally, they will lose out on credit card benefits like cashback and rewards.
The change significantly alters how rental payments are handled in India’s fintech ecosystem, shifting the focus back toward direct and fully verified banking channels.
