PhonePe, CRED will soon allow rent payment using credit cards
What's the story
Fintech giants PhonePe and CRED are testing a new model for rent payments through credit cards. The companies are currently running pilot programs with a select group of users, sources familiar with the matter told CNBC-TV18. This comes after a number of fintech firms had stopped offering this service due to regulatory concerns over using credit cards for person-to-person (P2P) transactions.
Compliance
Shift to marketplace model
The new model being tested by PhonePe and CRED is a marketplace platform. It involves payment aggregators (PAs) taking care of customer verification and compliance requirements. This development comes after some industry players tweaked their transaction structures to bring back credit card rent payments amid regulatory scrutiny. Earlier this year, platforms like RedGiraffe, PayZapp, and NoBroker were said to have resumed or continued credit card-based rent payments after adjusting their processes to comply with regulations.
Launch prospects
Potential relaunch next month
If the pilot programs prove successful, PhonePe and CRED could officially relaunch credit card-based rent payments as early as next month. However, details about the scale of these pilots, possible fees, eligible card networks or launch timelines have not been disclosed by either company. The move comes after a major revenue hit for PhonePe after it exited the rent payments business.
Revenue impact
Addressing regulatory concerns
Rent payments were a major revenue driver for many fintech companies. PhonePe had disclosed a revenue hit of around ₹1,250 crore after exiting this business. The RBI's concerns stem from the nature of credit cards, which are primarily designed for person-to-merchant transactions. To address these concerns, the marketplace model being tested by PhonePe and CRED ensures that end-user and end-usage are verified before approving rent payments via credit cards.