The country's largest private sector lender, HDFC Bank, recently announced that rent payments made through fintech apps using credit cards will now incur a 1 percent fee, capped at Rs 3,000 per transaction.
This decision marks a shift from credit card issuers previously halting rewards for rent payments.
The move by HDFC Bank is likely to set a precedent for other credit card issuers to implement similar charges on rent transactions made through fintech platforms like CRED, PayTM, Cheq, MobiKwik, and Freecharge.
ICICI Bank and SBI Cards had already ceased rewarding points for rent payments in March and April, respectively, following the trend of credit card issuers adjusting their policies due to the surge in rent payments using credit cards.
While the Reserve Bank of India has not explicitly directed banks to discontinue rent payments through credit cards, concerns persist regarding the use of cards for peer-to-peer transactions, prompting regulatory scrutiny on fintechs facilitating such payments.
Several fintech platforms, including PhonePe, Paytm, Mobikwik, Freecharge, and Amazon Pay, have ceased accepting rent payments via credit cards, while others like Cred, RedGiraffe, OneCard, NoBroker, and Epayrent have increased consumer verification measures due to rent payment failures and customer complaints.
The recent actions taken by fintechs and credit card issuers reflect regulatory unease over the significant increase in rent payments using credit cards in India over the past few years, leading to a shift in policies and practices within the industry.
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