The RBI has asked card payment gateways like Mastercard and Visa to halt card-based commercial payments made by companies and small entities. Following this, the card networks have discontinued their services to all non-KYC merchants and business outlets who may not be authorised to accept card payments until further notice, according to media reports.

The reports add that the exact reason behind the RBI’s recent step is still not known. However, industry sources reveal that the central bank is concerned about flow of money through the card route towards non-KYC merchants. While their bank accounts may be KYC-compliant, they are mostly not authorised to accept card payments as merchants.

As a general practice, business payments are made by companies through net banking or bulk transfers like Real Time Gross Settlements. Card payments are not commonly used in this space, until fintechs and card networks built the process through which business vendors could be paid by cards.