New Delhi, September 18, 2025: In a move that has left thousands of urban renters scrambling for alternatives, leading fintech platforms PhonePe, Paytm, and Cred have shut down their popular rent payment services. The decision follows the Reserve Bank of India’s (RBI) recent tightening of compliance norms for payment aggregators (PAs) and payment gateways (PGs), issued on September 15.

The new guidelines have fundamentally altered how digital payment players can facilitate transactions, effectively ending the easy rent payment model that had become a lifeline for many urban professionals.

RBI’s New Rules Shake Up Fintech Services

According to the latest circular, the RBI has mandated that payment aggregators must conduct full KYC (Know Your Customer) for all merchants on their platforms. In the case of rent payments, this means fintech firms must treat every landlord as a “merchant” — requiring detailed onboarding, compliance, and contractual obligations.

The regulator has also clarified that PAs can no longer operate on a “marketplace” model where payments are simply routed on behalf of third parties who have not been formally onboarded. This rules out the earlier practice where apps allowed tenants to transfer rent to landlords through credit cards, even if the landlords themselves were not registered merchants.

For fintech platforms, this change creates a compliance and operational burden that is both costly and logistically challenging. Given the fragmented nature of the rental market, where millions of landlords are individuals with no business registrations, most platforms have opted to suspend their services altogether.

Why Rent Payments Were Popular on Fintech Apps

Over the past few years, rent payments through apps like PhonePe, Paytm, and Cred have surged in popularity. These platforms allowed users to pay rent using credit cards, providing two major advantages:

1. 1. Reward Points and Cashback: Users could earn rewards, cashback, or loyalty points on high-value rent payments, making it a cost-effective financial strategy.
   2. Cash Flow Management: By putting rent on credit cards, tenants could manage cash flows better, enjoying a 30–45 day interest-free window before repayment.

For many millennials and young professionals in metro cities, this became a default mode of rent transfer. Some even used the model to boost their credit scores or maximize credit card reward programs.

However, the RBI had been flagging concerns for months. Earlier in 2025, several banks started restricting rewards for rent transactions and, in some cases, imposed additional fees, citing misuse and risks of fraudulent routing. The new circular is seen as the final regulatory clampdown.

Platforms Respond Swiftly

Following the announcement, PhonePe, Paytm, and Cred were among the first movers to disable rent payments. Users trying to access the feature now find notifications informing them that rent payment services have been discontinued in compliance with RBI guidelines.

A spokesperson from one of the fintech companies said: “We respect the RBI’s regulatory intent and have suspended rent payments until we can fully align with the new rules. Customer trust and compliance remain our top priorities.” Industry insiders note that other rent payment facilitators such as NoBroker and Housing.com may also be forced to suspend or reconfigure their offerings in the coming weeks.

Impact on Consumers

For consumers, the immediate effect is significant:

• • No more rent via credit cards: Tenants will need to shift back to traditional methods such as bank transfers, cheques, or UPI payments — without the benefits of reward points.

• • Disruption of cash flow planning: Those who relied on credit cards for financial flexibility will feel the pinch.

• • Reduced choice and convenience: The ease of paying rent directly from mobile apps is gone, at least for now.

Many renters have taken to social media to express frustration. “I used Cred for rent every month to manage my credit card rewards. Now I’ll lose out on almost ₹20,000 worth of annual points,” one Bengaluru-based software engineer posted on X (formerly Twitter).

Broader Implications for Fintech

This development is more than just a disruption for renters — it signals a wider recalibration in India’s fintech space.

1. 1. Compliance First: The RBI is reinforcing its message that fintechs must play by the same strict rules as traditional banks when it comes to merchant transactions.

1. 1. Business Model Impact: Rent payments formed a sizable share of high-value credit card transactions on fintech apps. Their loss could dent transaction volumes and revenues.

1. 1. Shift in User Behavior: With regulatory tightening, users may shift more towards UPI-based transactions or direct bank transfers, reducing the relevance of intermediaries for high-value recurring payments.

Experts believe fintech firms will now explore alternative services that comply with regulations while still offering value. “The suspension is a setback, but it could also push the ecosystem towards more sustainable, compliant innovations,” said a fintech analyst.

The Road Ahead

Whether rent payments through fintech apps make a comeback will depend on how quickly these firms can onboard landlords as full-fledged merchants. This process may require structural changes in India’s fragmented rental market. Until then, the convenience of paying rent through credit cards on apps like PhonePe, Paytm, and Cred is set to remain off the table.

For renters, the RBI’s move may feel like an inconvenience. For fintechs, it’s a reminder that growth in India’s booming digital payments sector will only be sustainable when built on robust compliance foundations.

For more information, please visit the Reserve Bank of India’s official website.

Disclaimer: This article is based on information available from public sources. It has not been reported by EQMint journalists. EQMint has compiled and presented the content for informational purposes only and does not guarantee its accuracy or completeness. Readers are advised to verify details independently before relying on them..