Shares of Paytm (One97 Communications Ltd.) are expected to remain in focus after the Reserve Bank of India’s September 15 circular forced fintechs to discontinue rent payment services. Alongside PhonePe and Cred, Paytm has suspended this category on its app, creating a major disruption for tenants who had been paying rent through credit cards to earn rewards and cashback.
The RBI’s revised rules mandate that payment aggregators (PAs) and payment gateways (PGs) can only process transactions for merchants with direct contractual agreements and full KYC compliance. Since landlords typically do not qualify as merchants, apps like Paytm can no longer facilitate such transactions.
Banks were already scaling back
Even before the RBI’s intervention, banks had started tightening rules. In June 2024, HDFC Bank levied a 1% fee (capped at ₹3,000) on rent payments via credit cards. ICICI Bank and SBI Cards had also withdrawn reward points on such transactions. Several fintech apps, including Paytm, had intermittently paused the service since March 2024.
The rent payment vertical had emerged as one of the fastest-growing use cases for credit card transactions. Its suspension removes a high-volume category from Paytm’s platform, potentially affecting transaction volumes in the near term. However, the RBI’s compliance-led framework is expected to bring clarity on permissible categories, which could stabilize fintech business models in the long run.
Analysts suggest that while the short-term impact could weigh on Paytm’s payments revenue, the broader fintech sector may adapt by strengthening compliance and shifting focus toward regulated categories such as bill payments, insurance premiums, and merchant services.
