The Reserve Bank of India (RBI) has recently implemented new guidelines starting July 1 regarding payment of credit cards. According to the recent update, the change will impact the use of prepaid payment instruments (PPIs) such as wallets and prepaid cards for credit card transactions. This change affects popular platforms like CRED, PhonePe and Paytm which are known for facilitating credit card payments.As per recent guidelines, all the payments have to go through the Bharat Bill Payment System (BBPS), managed by the National Payments Corporation of India (NPCI). The change will impact the customers of major banks who will not be able to use the apps to make bill settlements if their bank is not integrated with the BBPS system.According to the experts, the move has been taken to ensure security and safety which will help in streamlining the credit card payment processes. Banks that will get impacted majorlyThe customers of HDFC, ICICI Bank, Citi Bank and Axis Bank will majorly get impacted with the change. They will no longer be able to make credit card payments through their third-party apps, as these apps have not been integrated into BBPS so far. Other options for paymentsCustomers can use the official net banking service of the bank or mobile apps as an alternative option to make payments. On the other side, fintech companies like CRED, PhonePe and BillDesk could face significant disruption due to this major change. Here are the key points of the rule change:Restriction on Credit Card Loading: The RBIs new guidelines prohibit the loading of credit cards using PPIs. This means users can no longer use wallets or prepaid cards to pay their credit card bills.Impact on Platforms: Platforms like CRED and PhonePe, which have been facilitating credit card payments through their wallet services, will have to comply with this regulation. They can no longer allow users to use their wallet balance to pay credit card dues.Rationale: The RBIs move is aimed at curbing the misuse of PPIs and ensuring better regulation of digital payments. The restriction helps reduce the risk of money laundering and ensures that PPIs are used primarily for their intended purpose of small-value transactions.Alternative Payment Methods: Credit card users will need to switch to alternative methods such as direct bank transfers, net banking, or debit card payments to settle their credit card bills.The new rules require platforms and users to adapt to these changes, ensuring compliance with the RBIs regulatory framework.
