RBI directs Mastercard, and Visa to stop card-based commercial transactions

In another setback for the fintech companies, the Reserve Bank of India (RBI) has asked the global payment giants of the industry, Mastercard and Visa, to suspend the card-based commercial payments by businesses (small and large) as a result of the rising concerns with regards to ‘Know Your Customer (KYC) compliance.

Visa has already confirmed the regulatory directive receipt from the RBI, dated 8th February. On the other hand, a response from Mastercard is still pending.

This communication from the central of India comes a few days after the governing actions, which came against Paytm Payments Bank due to some major non-compliance concerns in the payments industry. This decision against the Visa and Mastercard by the RBI comes after some lapses in abiding by the KYC norms.

In response to the directive, Visa said that it had received the notification from the central bank. It further stated that RBI had requested information in terms of the role of Business Payment Solutions Providers (BPSPs) in commercial payments.

The communication had the directive to halt all BPSP payments until the next notice. It goes on to reveal again by saying that the BPSPs function under the RBI guidelines and licensing, precisely under the Payment Aggregator – Payment Gateways (PA-PG). However, the company confirmed some discussions with the Reserve Bank of India and ecosystem partners to guarantee regulatory compliance.

According to industry sources, some other fintech firms have also received communication from the RBI to cease the card transaction until further notice.