Big companies that help with payments from other countries, such as Visa and MasterCard, faced a big problem in India.
The Reserve Bank told them to stop business payments using their cards.
After this happened, important people from both companies talked with officials from the Central Bank.
Visa and MasterCard are very important for card payments because they are used a lot.
Instructions to suspend such payment from the card
On February 8th, the Reserve Bank did something. They told Visa and MasterCard to stop companies from using their cards for business payments (like when companies pay each other).
The Reserve Bank told them to stop all transactions of Business Payment Solution Providers (BPSP) until they say it’s okay.
Reserve Bank became suspicious of these things
The Reserve Bank hasn’t explained why they did this. However, news is saying that people were using the card to pay sellers who haven’t confirmed their identity (KYC).
This worried the RBI. Additionally, the Reserve Bank was thinking there might be fraud and illegal money activities in some big transactions.
Such cards are available under credit line
Banks give these cards to big companies. They can use them within the credit limit they get from banks. Big companies use these cards to pay smaller ones.
The RBI found situations where big companies, using a system for business payments with cards, gave money from their credit lines at banks to small companies without checking their identity (KYC).
This made the RBI worried that the card method might be used for illegal money activities.
Met with RBI officials
News is saying that after the RBI took action, important people from both big payment companies, Visa and MasterCard, met with RBI officials on Wednesday.
According to a report in Business Standard, these important people from Visa and MasterCard wanted to understand the best way to do business when transferring money from corporate cards to business accounts. So, they had a meeting with top officials from the RBI.
