The Return of Credit Card Rent Payments: How PhonePe and CRED are Bypassing RBI Restrictions

For many credit card maximizers, using a card to pay monthly rent was the ultimate strategy to hit steep annual spend milestones, unlock fee waivers, and rack up reward points. In late 2025, however, a regulatory crackdown effectively put the brakes on this lucrative play by forcing most fintech apps to shut down credit-card-based rent payments.

Now, the tide is turning. Major fintech giants PhonePe and CRED are actively testing a comeback for credit card rent payments with select users under a revamped, regulation‑friendly model.

Here’s how the new system is expected to work, why the feature disappeared in the first place, and what it means for your wallet.

The Big Update: Testing the "Marketplace Model"

According to industry sources, PhonePe and CRED have begun beta-testing credit card rent payments with select user groups. A full commercial rollout is expected within the next month.

To bring this feature back without triggering regulatory penalties, fintechs are shifting to a marketplace platform model. Under this framework, platforms are implementing rock-solid end-user and end-usage verification.

If you want to pay rent via a credit card moving forward, expect to provide:

• The PAN card details of both the tenant (payer) and the landlord (payee).
• A valid, legally signed rent agreement document.
• Stricter Know Your Customer (KYC) onboarding for landlords.

Why the Shift?

The primary concern has always been the misuse of credit cards for casual Person-to-Person (P2P) transfers disguised as rent. By enforcing the marketplace model, landlords are essentially treated as commercial merchants. This creates a direct contractual relationship between the payment app and the landlord, ensuring the funds are strictly tracked as per the rules outlined in the Reserve Bank of India (RBI) Payment and Settlement Framework.

Why Did Rent Payments Disappear?

The temporary death of rent payments was triggered by tightened regulations regarding how intermediaries handle money. The core rule explicitly bars third-party apps from routing credit card funds directly to individual personal accounts unless they hold a formal commercial contract with that recipient.

Because most rent platforms simply transferred money directly to a landlord’s personal bank account without onboarding them as an actual merchant, major players had to pull the plug.

The financial stakes of this exit were massive. Ahead of its highly anticipated IPO, PhonePe disclosed a staggering revenue hit of roughly ₹1,250 crore just from stepping away from the rent payments segment.

While some giants paused, smaller platforms like RedGiraffe managed to keep services active or resume early by integrating their systems into structured banking frameworks, much like the setup seen on HDFC Bank's official Rent Payment facility.

A Quick Timeline: The Evolution of Rent Payments

The credit card rent payment landscape has faced a rocky road over the last couple of years:

• Early 2024: Major credit card issuers cracked down on rent categories to stop subsidizing low-margin transactions. For instance, you can see the explicit removal of reward points on these categories outlined directly in the ICICI Bank Credit Card Terms and Features Update.
• Mid 2024: India's largest private lender, HDFC Bank, introduced a 1% transaction fee (capped at ₹3,000 per transaction) on all third-party platform rent payments.
• Late 2025: Strict enforcement led to a mass shutdown of the feature across major payment apps.
• Early 2026: Platforms began adjusting their processes to meet compliance concerns, leading to gradual, highly-monitored rollouts.
• Mid-2026 (Present): Market leaders PhonePe and CRED begin final testing for a fully compliant, mainstream relaunch.

Does it Still Make Sense to Pay Rent via Credit Card?

While the return of this feature offers excellent cash flow flexibility (giving you an interest-free buffer of up to 45–50 days to clear your rent amount), you need to weigh the costs carefully.

With platforms and banks now levying convenience commissions, platform fees, and credit card processing charges that can sit anywhere between 1.5% to 3% (plus GST), the math only works if:

1. You are trying to hit a specific annual fee waiver milestone (e.g., spending ₹2 Lakh to waive a card's annual fee).
2. You are triggering high-value milestone vouchers that outweigh the processing fees.
3. You genuinely need temporary monthly cash-flow management.

Moving forward, expect tighter scrutiny, mandatory document uploads, and slightly higher platform fees—but the convenience of using your credit line for major household expenses is officially making a comeback.