User Refunds For RMG: Fintechs Seek Clarity After Ban

Days after the Online Gaming Bill disrupted the Indian real money gaming (RMG) industry, fintech companies and banks have reportedly reached out to the MeitY and the RBI for clear guidelines and more time to comply with the new rules.

As per a report by MoneyControl, startups such as PhonePe, Razorpay, PayU, Stripe, among others have flagged concerns around customer refunds, chargebacks, and the handling of current accounts after the RMG ban comes into effect. 

The major point of contention for the aforementioned players arises from the fact that the refunds required to settle RMG user balances require an adequate liquidity buffer. Thus, they are said to have requested the government some flexibility to maintain balances for the refunds.

“The focus is on restricting money flow to banned platforms, not on treating players as criminals. Financial institutions should not freeze user accounts or block cards simply because individuals transacted with gaming platforms in the past,” a source was quoted by the publication.

On the other hand, banks are said to have sought clarity on how to separate regular salary or vendor payments from gaming-related transactions in current accounts. They warned that without such clarity, legitimate business payments could be disrupted if accounts were blocked.

The Fintech Impact Of RMG Ban

The fintech push for clarity comes after the government enacted the Promotion and Regulation of Online Gaming Act, 2025, earlier last week. The bill, which got presidential assent on August 22, proposes to ban all money-based online games, whether skill-based or chance-based, ending the long-standing legal distinction between the two. Important to note that the government is yet to notify the final Act. 

Following the introduction and quick passage of the bill, almost every player in the RMG industry has shut down such operations. These include major startups like Dream11, Mobile Premier League, A23, among a host of names. 

While a large chunk of these players have obliged with the new regulations, A23 parent Head Digital Works has filed a petition challenging the Bill. The Karnataka High Court is slated to hear the petition tomorrow. 

Prior to the blanket ban on RMG, fintech startups and banks processed deposits and withdrawals for users on RMG platforms, enabling real-time cash transactions for entry fees, winnings, and refunds.

While it is a little too early to discern the exact impact of the ban on the payments ecosystem, Fintech Association for Consumer Empowerment (FACE) chairman Ram Rastogi estimates an annual loss of INR 30,000 Cr in transaction volumes for these players. 

“This regulatory shock could shrink overall UPI growth by approximately 2% in volume and 0.5% in value, and payment gateway firms could see their annual growth rates fall by as much as 15%,” Rastogi said in a post on LinkedIn.