You will no longer be able to pay rent with a credit card, a blow from the RBI; learn why the facility has been discontinued.

RBI Bans Rent Payments via Credit Cards: Why Fintech Apps Stopped the Service and What Tenants Can Do Now

Paying house rent through credit cards had become a widely used feature in recent years, thanks to fintech apps like PhonePe, Paytm, Cred, Amazon Pay, Mobikwik, and Freecharge. This service gave tenants flexibility, reward points, cashback, and an extended interest-free credit period. But with new guidelines from the Reserve Bank of India (RBI), this convenience has come to an abrupt halt.

From September 15, 2025, fintech platforms have officially stopped processing rent payments through credit cards. Here’s why the RBI pulled the plug, how banks were already tightening rules, and what alternatives tenants now have.

Why Did RBI Stop Credit Card Rent Payments?

The RBI’s updated Payment Aggregator (PA) guidelines, released on September 15, 2025, state that payment aggregators can only process transactions for merchants with whom they have a direct contractual agreement. Since landlords do not fall under the “registered merchant” category, fintech platforms cannot legally channel credit card payments into their accounts.

In addition, the regulator raised concerns around KYC compliance and misuse of the system. There had been cases where individuals transferred funds under the pretense of paying rent but diverted them for personal use, bypassing full verification processes.

How Did Credit Card Rent Payments Work Earlier?

Until recently, tenants could easily log into apps like Cred, PhonePe, or Paytm, enter the landlord’s bank details, and pay via credit card. The app deducted the rent amount from the tenant’s card and transferred it directly into the landlord’s account.

This option gained massive popularity because:

• Tenants earned reward points and cashback on credit card spends.

• They enjoyed the interest-free credit period, making monthly cash flow easier to manage.

• Large rental payments contributed to meeting annual credit card spend targets, unlocking additional perks.

Were Banks Already Restricting This Service?

Yes. Even before the RBI’s new circular, banks had started tightening rules around such payments:

• HDFC Bank introduced a 1% fee on rent payments via credit cards in June 2024, capped at ₹3,000.

• ICICI Bank and SBI Cards withdrew reward points on rental transactions.

• SBI Cards reported in FY23 that mid-teen percentages of retail spending came from rent payments, averaging ₹20,000–21,000 per transaction. Seeing this trend, the company hiked processing fees from ₹99 to ₹199, and later to ₹200.

Clearly, lenders had already flagged the rapid growth of this category and were concerned about declining profitability compared to other retail spends.

Which Platforms Have Discontinued Rent Payments?

• March 2024: PhonePe, Paytm, Mobikwik, Freecharge, and Amazon Pay stopped offering the service.

• September 2025: After RBI’s fresh guidelines, Cred and other remaining players also withdrew the feature completely.

This effectively shuts down the credit card rent payment model across all major fintech platforms.

Who Will Be Most Affected?

• Tenants: They lose out on flexibility, cashback, reward points, and the buffer of an interest-free repayment window. Rent, often the largest monthly outflow, can no longer be managed via credit card leverage.

• Banks and NBFCs: Analysts expect a hit on fee income and EPS (earnings per share) for issuers like SBI Cards, which relied heavily on rental transactions to boost credit card usage.

• Fintech platforms: Rent payments had been one of the fastest-growing categories for apps like Cred and PhonePe. Losing this segment forces them to explore new models and offerings.

What Options Do Tenants Have Now?

With credit cards out of the picture, renters will need to rely on more traditional payment methods, including:

• UPI transfers

• Bank transfers (NEFT, RTGS, IMPS)

• Cheques

• Standing instructions for recurring monthly payments

While these options are reliable, they do not provide the perks that credit cards offered, such as cashback, reward points, or deferred payments.

Bottom Line

The RBI’s clampdown on credit card rent payments marks a significant shift for both tenants and fintech companies. What was once a convenient, reward-packed, and widely adopted feature has now been curtailed in the interest of regulatory compliance and financial security.

For tenants, this means rethinking monthly cash flow management without the cushion of credit cards. For fintech firms, it signals the need to innovate and introduce new value-added services to retain users. And for banks, the focus may now shift back to more sustainable categories of credit card spending.

In short, the golden period of paying rent through credit cards is over, and both users and companies will need to adjust quickly to this new reality.