A significant judgement affecting foreign payment processors such as Visa and MasterCard has been made by the Reserve Bank of India (RBI). The RBI ordered these businesses to cease accepting card payments for business purposes on February 8. The decision was made due to worries about possible money laundering, fraud, and payments to noncompliant merchants.
Visa and MasterCard have been requested by RBI to halt all Business Payment Solution Providers (BPS) transactions till further notice. The choice to pay these merchants—who are being paid by large corporations—who have not undergone complete KYC is one of the primary drivers behind it.
In actuality, banks provide these cards to large corporations. Corporates can access these through the credit lines that banks provide them. These cards are used by large corporations to pay smaller businesses.
The RBI discovered a few instances when large corporations used the commercial card payment system to transfer funds from bank credit lines to small businesses without completing KYC. Because of this, the RBI became concerned that money was being laundered through the card channel.
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