RBI's New Rule Shakes Up Rent Payments, PhonePe & Paytm To Shut Credit Card Option

Mumbai: If you used apps like PhonePe, Paytm, or Cred to pay rent with your credit card, things are about to change. The Reserve Bank of India (RBI) has issued new guidelines that are forcing fintech companies to stop this service. These platforms were popular among users who wanted the convenience of digital rent payments while earning credit card reward points. However, the RBI now considers this system risky and has tightened the rules around it.

Why Was This Payment Option So Popular?

Until now, paying rent through credit cards offered multiple benefits. It allowed users to enjoy interest-free periods, earn cashback or reward points, and manage cash flow more efficiently. Tenants would pay their landlords through these apps, and landlords would receive the money instantly. This simple and attractive method gained popularity very quickly, especially among young professionals and working tenants.

What Has the RBI Changed?

On 15 September 2025, RBI released a circular aimed at regulating payment aggregators and payment gateways. According to the new rules, these companies can only process payments for merchants with whom they have a direct agreement and where full KYC (Know Your Customer) compliance is completed. This change means that landlords—who are not officially registered as merchants—can no longer receive rent payments through credit card transactions on these platforms. As a result, apps like PhonePe, Paytm, and Cred have now stopped offering this feature.

Banks Had Already Started Tightening Rules

Even before the RBI’s announcement, several banks had begun putting restrictions on credit card rent payments. In June 2024, HDFC Bank introduced a 1 percent charge on such transactions. ICICI Bank and SBI Card also stopped giving reward points for rent payments made through credit cards. Some fintech companies had already suspended the service earlier in March 2024, but they briefly resumed it after adding stricter KYC requirements. Now, with RBI’s latest directive, the option has been completely shut down.

What This Means for Tenants

The new rules will most impact people who used this facility for better financial management. Many relied on credit card payments to pay rent without using their savings right away, while still enjoying the perks of digital transactions. With the service no longer available, tenants will now have to return to more traditional