No Rent Payment with Credit Cards if Landlord not Registered at the Merchant on PhonePe, Paytm, and CRED

Fintech platforms like PhonePe, Paytm, and Cred have recently disabled their “rent payment via credit card” features. This stems from new RBI rules tightening oversight of payment aggregator / payment gateway behaviour, in particular around marketplaces, merchant KYC, and how payments are routed. 

This article explains what exactly changed, how fintechs were using the rent-payment feature, why RBI intervened, what the implications are for users & fintechs, and what users must do going forward.

For many renters, using a credit card to pay monthly rent was a way to manage cash-flow and also earn reward points. Platforms like PhonePe, Paytm, Cred introduced “rent payment” options which let users pay rent via credit card, often routing payments via a payment aggregator or gateway. 

But as of mid-September 2025, those features are being shut down in response to recent RBI circulars. According to reports, users will no longer be able to use those services on fintech apps and must resort to traditional methods like bank transfers, online banking, or even cheques. 

The move has implications for user convenience, fintech business models, and regulatory compliance.

What Changed: The RBI Curbs / New Rules

To understand why this shift happened, here are the regulatory changes and clarifications from the RBI:

• On 15 September 2025, RBI issued a circular that tightened rules around Payment Aggregators (PAs) / Payment Gateways (PGs). One key point: a PA must ensure that a marketplace it onboards does not accept payments for any seller who is not onboarded onto the marketplace’s platform.
   
• Previously, fintech platforms were processing rent payments by acting like “marketplaces”, as if the landlord is a “seller” providing service (rent collection), and the fintech (PA/PG) is facilitating. But many landlords were not formally onboarded with KYC etc., or considered merchants under the regulatory regime. This allowed rent payment via credit card, routing through aggregator systems.
   
• The new rule prohibits this kind of arrangement: a PA cannot act as a marketplace for a “seller” (i.e. landlord) who is not onboarded/approved. That breaks the basis for many rent‐payment features. Once this is disallowed, platforms shut down the feature to comply.

How Rent Payment via Fintech Worked Before vs Now?

Here’s a comparative view to understand the old workflow vs new restrictions, and what changes for users and fintechs.
 

After seeing the table, the takeaway is that while users previously had more flexibility (credit card + reward benefits), regulatory clarity has reduced that flexibility in favour of stronger KYC / onboarding checks and stricter compliance. For fintechs, revenue or fee income from rent payments via credit cards likely declines; for users, a loss of convenience and points.

Why Fintechs Shut Down Rent Payment Feature?

Several factors combined to cause fintechs to disable or suspend the rent-via-credit-card functionality:

1. Regulatory Risk: The new circular makes companies vulnerable to non-compliance, penalties if they act as marketplaces for sellers not properly onboarded.
    
2. Operational / Compliance Burden: Ensuring all landlords are onboarded with KYC, screening, merchant verification etc. adds cost. Many landlords (especially individual ones) may not want to go through formal merchant processes.
    
3. Financial / Business Model Implications: Rent payments via credit cards are usually large ticket flows. Fintechs likely derive fee income or commissions thereof. Removing that stream reduces revenue. Also banks may charge additional interchange or penalty fees where required.
    
4. Customer Expectations and Legal Certainty: Users accustomed to using credit cards for rent may challenge removal; but fintechs likely assessed that staying non-compliant risked regulatory action, so shutting down was safer.

Implications for Users & Fintechs

For Users:
 

• Loss of convenience: Users who used to pay rent with credit card via fintech apps lose that option. To pay rent, they may need to use bank transfers, UPI (if landlord supports it), cheques or NEFT/RTGS.
   
• Loss of reward points: Credit card bills for rent were a source of rewards (cashback, rewards) for many users. Those will now decline.
   
• Cash-flow impact: Using credit card allows deferment of payment (until the billing cycle). Without that, renters may need to plan cash outflows more carefully.
   
• Alternative costs: Some landlords may accept UPI / bank transfer, but if not, using cheque or offline methods may have transaction costs, delays.
   

For Fintechs:
 

• Revenue decline from fees associated with credit card payments of rent.
   
• Need to review and possibly invest in compliance / merchant onboarding processes, if fintechs want to retain rent payment features, but in a compliant way.
   
• Possible loss of differentiation: fintechs used this feature as value add. Removing it could reduce competitiveness or reduce stickiness of users.
   
• Reputational risk: users inconvenienced may respond negatively; communication becomes key.
   

What Users / Landlords Must Do Now?

Given this shift, users and landlords should consider:

• Landlords formalising acceptance channels: If landlords want to continue accepting bank transfers or digital payments via fintechs, they need to be properly onboarded (merchant KYC, etc.), so platforms can route payments cleanly.
   
• Exploring alternative payment modes: UPI, bank transfer, direct debit (if possible), and online banking might be preferred now. Platforms might also implement rent payment via these non-credit card routes.
   
• Credit card bills & payment timing: Users accustomed to using credit cards for rent need to anticipate cash outflow earlier (if paying via bank or non-card method).
   
• Check fintech announcements: Some fintech platforms might reintroduce rent payment via credit card for landlords who comply with merchant onboarding; users should follow updates.
   

Regulatory Intent & Broader Context

To understand why RBI did this, here are the motivations & broader policy context:

• Preventing misuse: Payment aggregators acting as marketplaces for “sellers” without merchant KYC poses risk (fraud, illicit routing etc.). Ensuring all merchants / payees are properly onboarded improves traceability, fraud control.
   
• Strengthening oversight of fintechs / PAs / PGs: Fintech wallets, aggregators, gateways have grown rapidly; RBI has been gradually increasing regulatory scrutiny (on KYC, liquidity, risk management). This is another step in that direction.
   
• Consumer protection: Ensuring that consumers are aware of transaction parties, risks, and that payments are handled securely, with proper legal identity of payees.
   
• Aligning business models with compliance: Marketplaces vs pure PA/PG relationships were being used flexibly; regulators want clearer roles defined: is the platform a marketplace or just facilitating payment for someone onboarded?
   

Potential Disadvantages & Challenges

While the regulation aims to improve compliance and risk mitigation, there are trade-offs:

• Inconvenience to users: Losing credit card flexibility and reward points; increased dependence on manual/bank methods.
   
• Costs: Users may incur bank transfer fees, or costs of cheque book usage; delays may lead to late rent notices etc.
   
• Landlords’ reluctance: Many landlords may not want to go through formal onboarding, or understand KYC / merchant registration. They may resist accepting digital methods requiring verification, which may slow adoption.
   
• Reduced revenue for fintechs: As fintechs lose this stream, they may need to find other revenue sources; may pass costs elsewhere (e.g. higher fees for other services).
   

Conclusion

The RBI’s recently enforced rules for payment aggregators and marketplaces have brought an end to credit-card based rent payments via fintech apps like PhonePe, Paytm, Cred, unless the landlord or rent collector is formally onboarded as a merchant with required KYC. While this improves regulatory compliance and reduces risk, it also removes a convenience many renters valued—alongside rewards and flexibility.

For users, this means adjusting to alternative payment methods and planning payments ahead. For fintechs and landlords, it signals increased regulatory burdens and a need to ensure legal compliance in how they accept payments. Ultimately, while the move may be disruptive in the short term, it is likely part of a broader shift toward more regulated, traceable, and secure payment architecture.

 

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