Monday, October 7

India’s P2P Payment Overhaul: Things You Need to Know, 2024


In a decisive move to safeguard the financial ecosystem, the Reserve Bank of India (RBI) has introduced stringent regulations targeting peer-to-peer (P2P) credit card transactions1. This regulatory action is aimed at transactions that involve payments for rent and tuition fees through third-party applications, a practice that has recently proliferated among retail customers.

p2pIndia’s Clampdown on P2P Credit Card Transactions

The Crux of the Matter

The RBI’s scrutiny was prompted by the discovery that customers were using credit cards to make payments for rent and tuition fees via fintech platforms. These platforms facilitated payments to their merchant accounts, followed by an immediate transfer to the recipient’s bank account, such as a landlord, in exchange for a fee.

p2p

Regulatory Stance

The RBI mandates that credit card transactions should be direct interactions between merchants and customers (P2M). The involvement of a third party that routes funds through an escrow account is considered a circumvention of the regulations and is therefore prohibited. The central bank’s concern extends to transactions that not only contravene the credit card framework but also fall outside the current licensing scope of the entities involved.

Implications for Fintech Services

Prominent fintech companies like CRED, OneCard, and NoBroker, which have been offering these services, are now under the radar. These entities typically charge a commission of 1.5-3% plus GST on such transactions. For instance, a rent payment of ₹25,000 could incur an additional fee of ₹400-6001.

Moving Forward

The RBI’s new regulations are a clear signal to the fintech sector to align their operations with the established financial norms. As the landscape evolves, it will be crucial for both consumers and service providers to navigate these changes with a keen understanding of the regulatory environment.


This article reflects the latest developments as of March 10, 2024, and provides insights into the implications of these regulatory changes for consumers and fintech companies alike.

Also Read: 

  1. Unlocking UPI Sentiments: Why 73% of Users Reject Transaction Fees
  2. 72% Fewer Indian Fintech Startups Incorporated In 2023 Than In 2021

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