For lakhs of tenants across India, paying rent through apps like PhonePe, Paytm and CRED had become routine. The process was fast, rewards were attractive, and landlords received instant settlements. But this convenience has suddenly ended. After recent action by the Reserve Bank of India (RBI), these fintech companies have suspended their rent payment services.
Why RBI stepped in
The central bank has been closely watching how prepaid payment instruments (PPIs) and credit cards were being used for transactions that looked more like financial engineering than genuine payments. Rent transfers, especially those made through credit cards with cashback or reward points, raised red flags.
Officials believe some users were misusing these services — paying themselves or family members under the guise of “rent” to earn points and freebies. This blurred the line between consumer spending and money circulation, something the RBI wants to strictly prevent.
A fintech insider explained, “Rent payments turned into a tool for rewards gaming. The RBI saw this as an unhealthy trend and moved to stop it.”
Impact on fintechs
PhonePe was the first to notify customers about the suspension. Paytm soon followed, while CRED, which had once marketed rent payments aggressively, also pulled back. None of these platforms want to risk penalties for non-compliance.
In an official statement, Paytm said: “We remain committed to offering safe and innovative financial products in line with regulatory guidelines.” CRED reassured users that while rent payments are gone, its core services such as bill payments and card management remain unaffected.
The immediate effect for fintechs is the loss of a popular feature that kept customers engaged. Rent payments were not just transactions — they brought users back every month, boosting app activity. Without this, companies may need new hooks to retain users.
Tenants and landlords react
For tenants in metros like Bengaluru, Delhi and Mumbai, the shutdown is frustrating. Many had automated their monthly rent transfers through these apps. Now they must shift back to bank transfers, UPI, or standing instructions.
“It was super easy with CRED. I never missed a due date and even earned rewards. Now I’ll have to set reminders manually,” said Sonal Mehta, a young professional in Mumbai.
Landlords too have mixed feelings. Some liked the instant settlements and easy digital records. Others, however, felt uneasy with tenants paying via credit cards. “Rent is a basic expense. If someone is swiping a card for it, it looks risky,” said a Pune-based landlord.
What’s next for digital rent
The RBI’s move sends a clear message: fintechs must innovate within defined rules. Experts say alternatives like UPI AutoPay or direct integration with housing platforms may emerge in the future, but the cashback-driven rent payment model is unlikely to return.
Analyst Rajiv Singh noted, “The regulator is preventing a bubble. When rent turns into a rewards game, it distorts spending behavior. This clampdown is a reminder that compliance is as important as innovation.”
For users, the shift is more about habit than feasibility. Bank transfers, IMPS and UPI still work seamlessly for rent. What’s gone are the reward points and cashback offers that made the transaction feel lighter on the pocket.
The bigger picture
In the long run, the suspension may actually bring discipline. Rent is a fixed, essential expense — not something meant for credit tricks. While fintechs lose a growth lever, the RBI gains in ensuring financial stability.
For tenants, it’s back to basics. For fintechs, it’s a wake-up call to balance growth with regulations. And for landlords, it’s business as usual, minus the extra perks.