Here’s why RBI placed B2B card pay on full hold
economictimes.indiatimes.comfintech sector, the Reserve Bank of India has put usage of cards for B2B payments on hold until further notice.
ET wrote on February 14, that card schemes like Visa and Mastercard along with banks have been asked to halt vendor, supplier and other such payments made via commercial credit cards. These transactions are facilitated by fintech startups like EnKash, Paymate and others who have stopped it as well.
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Offering CollegeCourseWebsiteIndian School of BusinessISB Product ManagementVisitMITMIT Technology Leadership and InnovationVisitIndian School of BusinessISB Professional Certificate in Product ManagementVisitBesides the card schemes, even banks which offer commercial credit cards have been asked to halt these payments as well. «I am told that there could be a meeting with the regulator next week and we are hopeful some clarity will emerge,» said a senior industry executive in the know. So what could be the potential issue here? ET explains.
Break in flow of transactions: When a company makes a payment to its vendor, under normal circumstances these transactions are done via bank transfers. In this case bank A of the client makes the transfer to bank B of the vendor. But in case of a card based payment, bank A only gets to see a payment gateway to whom the transaction is happening. Now the PG will compile a bunch of these transactions into an escrow account and pay out to the right vendors in a day or two. So effectively, the vendor's bank gets to see a
