LazyPay updates terms to comply with RBI order

The buy-now-pay-later (BNPL) service asked customers in a message on Thursday to accept the terms, failing which all transactions would be blocked across LazyPay products.

“To comply with the latest regulations, we need to block your transactions on all LazyPay products from today. To continue using LazyPay, please accept the updated T&Cs now,” the company said in a communication to customers. ET has reviewed a copy of the message.

ET was the first to report about
LazyPay’s plans to update its terms and conditions on June 23.

On June 20, the central bank disallowed non-bank wallets and pre-paid cards from loading their credit lines onto these platforms.

“The PPI-MD (master directions) does not permit loading of PPIs from credit lines. Such practice, if followed, should be stopped immediately,” the regulator had said.

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The move caused disruptions among certain digital lending as well as card-based fintech firms. Industry stakeholders have since reaching out to the RBI for consultations.

ET reported on June 23 that
RBI’s communication on PPIs had the backing of the government and had come after commercial lenders raised concerns over alleged flouting of rules by fintech companies.

These concerns included slackened know your customer (KYC) norms and breaches in anti-money laundering (AML) guidelines by the fintech firms, ET reported citing sources.

As a result of the RBI’s directive, several fintech firms such as Jupiter, EarlySalary and KreditBee temporarily stopped customers from making any transactions on their prepaid cards, ET reported citing sources.

With regulatory uncertainty, banks such as RBL are also pulling out of their co-branding card arrangements with fintech firms.

Earlier this week, Slice updated its terms and conditions, saying it would charge customers a 36% interest rate for loan repayments made in more than one instalment. This was a big change from its ‘Pay-in-3” repayment construct, doled out through its cards.

ET
reported on June 27 that the Payments Council of India (PCI) and several fintech firms had urged the government to step in to resolve the fallout from the recent RBI directive.

In its recommendations, PCI said fully compliant KYC PPIs should be treated on par with bank accounts, and that they should be allowed to disburse credit.