look news india
Credit Card Payment Update: The use of credit cards is continuously increasing in the country. According to the Reserve Bank of India (RBI), around Rs 1.5 lakh crore was paid through credit cards in the month of February alone. There has been an increase of 26 percent on annual basis. A large amount of this payment is related to rent payment, tuition fees, vendor payments and maintenance of the society. In the last few years, people have started using credit cards more for this type of payment.
Actually the Reserve Bank has a problem with this type of payment. They believe that credit cards are designed for the individual to make payments to the merchant. Due to this, person to person payment cannot be made. RBI has objected to such payments and it is also being speculated that soon options like rent payment, vendor payment and tuition fee payment through credit cards will be discontinued.
How can it be used?
In the last few years, many such fintech companies have come into the market, which provide the option of paying rent and society maintenance charges through credit cards. An escrow account of the fintech credit card holder is opened for such payments. Money is transferred from the card to this escrow account and then that money is transferred to the bank account of the landlord. Fintech companies charge 1 to 3 percent for this facility. There are many fintech platforms, including Red Giraffe, CRED, Housing.com, NoBroker, Paytm and Freecharge, that provide such facilities.
What are the benefits of paying by credit card?
There are many benefits of paying rent, tuition fees and maintenance etc. through credit card. First of all, even if you do not have cash in your pocket, you still get 50 days to make this type of payment. Secondly, many credit card companies also offer cashback and reward points. You can also avail discounts through these reward points. Apart from this, some companies also waive the annual fees as per the expenditure limit.
What is the problem with RBI?
The Reserve Bank clearly states that credit cards can be used for person-to-business payments. If there is a transaction other than the customer and the merchant, the person receiving the money will need to open a merchant account. There is a lot of difference in the rules and standards of both. Therefore it will be necessary to follow it. After RBI expressed concern, banks have also started efforts to stop such payments. Many banks have even stopped giving reward points on fare payment. Some banks have excluded the option of paying rent or tuition fees from the expenditure limit to waive the annual fee. However, we will have to wait for the decision of RBI to impose a complete ban on it.