On February 14, ET wrote that fintech startups like EnKash, Paymate and others have been instructed by card network Visa to stop offering business payment services through their commercial cards.
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The central bank mentioned that only one card network offers this service currently, without naming them.
However, global card payment major Visa confirmed the development yesterday. Visa onboards fintechs for this service under its BPSP programme. BPSP stands for business payments solution provider, which is a term used to describe the service of providing B2B payments through card rails
Explaining the rationale behind the action, RBI said the intermediary accepts the payments from corporates for their commercial transactions and remits the funds to recipients who are not authorised to accept card payments. Hence, the regulator has asked these players to stop offering this service.
“The intermediary in the above arrangement pooled a large amount of funds into an account which is not a designated account under PSS Act,” said the RBI in the press release.
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The regulator also said the arrangement did not comply with the requirements stipulated under the master direction on KYC (know your customer) as issued by the RBI.“As the matter is under detailed examination, the card network has been advised to keep all such arrangements under abeyance, till further orders. It is clarified that the Reserve Bank has not placed any restriction with respect to normal usage of business credit cards,” the central bank added.
