RBI Proposes Changes In Regulatory Norms For Payment Aggregators
Non-bank entities providing physical payment aggregator services must inform RBI of its intent to seek authorisation within 60 days.
The Reserve Bank of India has proposed regulations for payment aggregators who handle physical point-of-sale services, including minimum net worth requirements and a timeline for compliance, the central bank said in a press release on Tuesday.
Banks, which provide physical payment aggregator services, do not require separate authorisation from the RBI. However, they must ensure that they comply with regulations within three months—or by July 16.
Non-bank entities providing physical payment aggregator services must inform the RBI of their intent to seek authorisation within 60 days. Those offering online services, if willing to continue, must seek approval from the Department of Payment and Settlement Systems, RBI, Central Office, within 60 days about their existing operations.
Regulations on governance, merchant onboarding, customer grievance redressal and dispute management framework, baseline technology recommendations, security, fraud prevention and risk management framework must be abided by within a period of three months, the RBI said.
On minimum net worth, the RBI said that non-bank entities offering physical payment aggregator services and looking to apply for licences must have a minimum net worth of Rs 15 crore at the time of submission of their application to the RBI. By March 31, 2028, non-banks already offering these services must have a minimum net worth of Rs 25 crore and then maintain a net worth of Rs 25 crore at all times.
Non-bank entities that are looking to apply for payment aggregator licences must attain a minimum net worth of Rs 25 crore by the end of the third financial year from the day of approval by the RBI.
Those who may not be able to comply with the net worth requirements ought to wind up their physical payment aggregator services by July 31, 2025. Further, banks will close non-bank entities' accounts used for these services by Oct. 31, 2025, if they are unable to produce evidence regarding applications for authorisation with the RBI, the central bank said.
Additionally, the RBI updated certain directions on payment aggregators related to know-your-customer, due diligence of merchants, operations in escrow accounts and more, as digital transactions have grown rapidly in recent years.
The RBI, while acknowledging the significant role of payment aggregators in the digital payments space, proposed the following changes:
The RBI defines payment aggregators as "entities that onboard merchants and facilitate the aggregation of payments made by customers to such merchants for the purchase of goods and services, using one or more payment channels, in online or physical point-of-sale payment modes through a merchant’s interface (physical or virtual), and subsequently settle the collected funds with such merchants."
The escrow account of the payment aggregator can be used for both physical and online services.
Funds involved in payment for goods or services at the time of delivery will be routed through the escrow accounts. Cash-on-delivery transactions are excluded.
Debits to escrow accounts for "payment to any other account on specific directions from the merchant" are not allowed with immediate effect.
If a payment transaction is facilitated by two or more authorised payment aggregators in the chain, RBI's instructions apply to all involved aggregators.
In transactions using cards at point-of-sale devices, only card issuers and card networks will be allowed to store card data as of August 1, 2025. Any such data stored previously shall be purged.
These instructions will come into effect on May 16, irrespective of the status of the application submitted to the RBI for seeking authorization, the central bank said.