If you use credit and debit cards, there’s a major update that has come forth. Users can make payments for various services through credit cards, while debit cards serve as an alternative to cash and are linked to your bank. Both are crucial mediums for payments. The Reserve Bank of India (RBI) may discontinue certain services associated with credit cards. Additionally, RBI has issued a draft circular to payment aggregators concerning credit and debit cards, with the new rules possibly coming into effect next year.
Stringent Rules for Non-Banking Institutions
The central bank is preparing to tighten regulations for payment aggregators associated with non-banking institutions. According to the draft circular, payment aggregator firms will not be allowed to store card-on-file (COF) data for debit and credit cards from August 1, 2025. Only card issuers and networks like Visa, Mastercard, and banks will be permitted to collect COF data. Previously stored data will also need to be removed. The firm will only be allowed to store the last 4 digits of the card number and the cardholder’s name.
Payment Restrictions May Apply
RBI’s actions could be a significant blow to credit card users. It is believed that credit cards are designed for person-to-merchant payments, not person-to-person payments. The central bank has expressed concerns about tuition fees, rent payments, society maintenance charges, and vendor payments. It is estimated that RBI may impose restrictions on such payments in the coming days.