Startup Fintech Jupiter and Earlysalary have suspended their credit-related card services after the ban on the Bank of India Reserve for non-bank loading loans into electronic wallets, while other services including postpaid PayTM and Olamoney have also been affected.

Jupiter Edge, Jupiter’s Neobanking Platform Unit, tells customers in a social media post on Thursday that it “stops” its services follows the latest RBI guidelines. “Please make sure that we are in the process of evaluating, you will be told once we are back,” said the company.

Earlysalary said that he had made a brake on the card service for now. “There is no preparation time given. We also understand (RBI Circular) and will return with the answer, “Akshay Mehrotra, Co-Founder and CEO Earlysalary, told you.

As for postpaid paytm, arms ‘buy now, pay later’ the Paytm fintech giant is still not available in third -party applications such as Zomato and Swiggy since the RBI announcement on Tuesday.

Paytm, however, denied this and said postpaid service “continued to operate fully for its users”.

For a small number of users, where they have connected postpaid Paytm to Paytm Wallet for use, when the wallet balance is low, the service has been temporarily stopped by delayed clarification,” said a company spokesman in your email reply to you. “In addition, the PayTM wallet is issued by Paytm Payments Bank and therefore not included in the guidelines according to our understanding.”

The spokesman added a step by Swiggy and Zomato “taken before this problem about other RBI problems.” It is not clear what concerns are.

Olamoney Postpaid, a digital credit payment service from the Ola cabin aggregator, also tells users that they deactivate the provisions that allow the use of postpaid services together with the user’s balance on the money card or Ola Wallet. The company provides products in partnerships with affiliate financial partners, including non-sacrificial financial companies.

Rajan Bajaj, founder and CEO at Slice, said the company worked with its partner bank to comply with the regulation.

Existing problems

RBI on Tuesday prohibits NBFC from loading credit path to prepaid payment instruments (PPI) such as e-wallet or prepaid cards.

When loading a wallet (for example GPay, Phonepe, Amazon Pay, or PayTM) using a bank debit card or credit card is permitted, takes credit paths from NBFC, or non-banks, and then loading consumer wallets are not permitted.

Some new-age fintechs such as slice, Payu, Lazypay, and CreditBee, and Neobans have taken PPI Bank (branded credit cards, for example) and offer credit paths through NBFC or NBFC-Partners themselves to customers.

Basically, players such as slice, onecard, and uni, mainly known as challenger credit cards, as well as post-pay services such as postpaid paytm, postpaid Ola, and flipkart paid later, will be influenced by notification because most of these BNPL players are their credit sources From NBFCS, which does not have direct affiliates with banks.

Tighten the snares

NBFC cannot have an account that allows you to pay using it. You can take money to your bank account and pay from the bank. NBFC is not allowed to issue a card. The wallet provider is not permitted to issue credit, “said Deepak Shenoy, founder and CEO at the Investor Research and Wealth Management Firm Capital.” Maybe the idea is that NBFC loans must reach a bank account. If not, the NBFC/Wallet/Mutual Fund ecosystem can be used to fullypass the banking system. “

He added: “MF lent it to NBFC, NBFC lent money to a wallet, and a wallet is used to pay. No need for a bank at all?”

Consumer protection is said to be another reason (in addition to protecting banks from shadow players who take over) for RBI’s decisions. Macquarie Capital Securities in a note says many customers unconsciously take credit lines through their wallet at the check-out point.

“Some of these practices do not match the regulator,” he added.

One of the founders of Bharatpe, Ashneer Grover, also took social media that expressed his views, calling the latest RBI circular as “Flexible Steps by the Bank”.

Does not allow the loading of pre -paid instruments through credit aims to protect the lazy credit card business from the BNPL fintech business. This is a flexible step by the bank – the search for rent. But the market is a market and regulation will eventually achieve what the market needs What is needed by the market, “Ashneer said in a tweet.

The next action

According to Sameer Singh Jani, founder and CEO of the FIFTH Digital Fintech Digital Consultant company, the affected fintech company may have to acquire the NBFC license and credit card license so they have regulatory support.

They can move towards the classic BNPL model funded by the equity instead of the credit path from NBFC. This segment also carries the risk of regulation, however, it is still available to build, “said Sameer.” They can also move towards short -term individual loans, where payments will be made to traders and in rare cases to customers. This is basically eliminating a layer of card involvement. “

Startup may also see partnering with banks for savings accounts with credit channels, which are within the RBI framework, or at least close to it, he added.

Evaluating the impact on customers, experts say that Challenger credit cards will shrink only into prepaid cards.

Many card customers have the potential to return to ‘No Credit Arena again’, because they may not meet the criteria for bank credit approval criteria,” Sameer said.

These cards are a great gift from the perspective of inclusion (students and young professionals) and the change will damage the availability of customer credit.

(Updated all over with additional information, and to include clarification from PayTM that “Postpaid services continue to operate fully for its users.”)