Fintechs Halt Customer Transactions on their Prepaid Cards
After the Reserve Bank of India (RBI) banned the finance industry from loading credit lines on Prepaid Payment Instruments (PPI), Jupiter, EarlySalary and KreditBee among others have temporarily halted customers from making transactions on their prepaid cards.
It is expected that some partner banks of these card-based fintech firms may stop supporting their bank PPIs to these platforms once they receive a clarification from the RBI. The reason for partner banks facing the heat is believed that they are involved in the co-branding exercise.
Additionally, some of the major bank partners have been clarified from the RBI and learnt that the notification also applies to the bank PPI’s. As a result, some banks informed their fintech partners that they will not be providing bank PPI support to them any longer.
Currently, it is observed that State Bank of Mauritius, partnered will major credit card fintech firms, is one of the only banking players to continue supporting the co-branded cards.
On the other hand, industry groupings such as The Digital lenders’ Association of India (DLAI) and the Fintech Association for Consumer Empowerment (FACE) are in pursuit of seeking relief from the regulator, as well as, pushing for deferment of the implementation timeline
Card-based fintech firms like Slice, Uni, Kissht and LazyPay are also likely to be impacted, particularly when their business models are now questioned.
Jupiter says that its payment services are currently unavailable to comply with the new RBI guidelines and it has announced to share an update the sooner it receives one.
Although fintech firms are seeking for a clarification from the RBI, they are hoping for other ways to work around the regulator’s order.
Lazy is said to be updating its terms and conditions as per RBI’s note and its unknown about the kind of the changes it will make.
Other fintech firms are of thoughts of re-issuing credit cards as some bank partners are probable to logout on complying with RBI’s communication.
Kissht says that it will not be carrying the RBL bank card product, since it believes the product to be a small part of its business. However, it claims to look forward to Ring’s potential and its ability to provide a best-in-class payments and credit solution.
On the other hand, industry groupings such as The Digital lenders’ Association of India (DLAI) and the Fintech Association for Consumer Empowerment (FACE) are in pursuit of seeking relief from the regulator, as well as, pushing for deferment of the implementation timeline.