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Regulation of Payment Aggregator – Cross Border

Reserve Bank of India (RBI) has issued guidelines for regulation of payment aggregators facilitating cross-border payment transactions for import and export of goods and services.

Who are Payment Aggregators?

Payment Aggregators (PAs) are entities that facilitate e-commerce sites and merchants to accept various payment instruments from the customers for completion of their payment obligations without the need for merchants to create a separate payment integration system of their own. PAs facilitate merchants to connect with acquirers. In the process, they receive payments from customers, pool and transfer them on to the merchants after a time period.

Who are Payment Aggregator – Cross Border (PA-CB)?

Payment Aggregator – Cross Border (PA-CB) are entities that facilitate cross-border payment transactions for import and export of permissible goods and services in online mode.

Who is authorised to operate as PA-CB?

AD Category-I Banks

AD Category-I banks do not require separate approval from Reserve Bank of India (RBI) for undertaking PA-CB activity.

Non-bank entities

  • Non-banks which provide PA-CB services as on October 31, 2023, shall apply to RBI for authorisation by April 30, 2023. They shall be allowed to continue such services till they receive communication from RBI regarding the decision on their application. 
  • Authorisation for PA-CB activity may be sought for any one of the following categories -
    • Export only PA-CB (PA-CB-E)
    • Import only PA-CB (PA-CB-I)
    • Export and Import PA-CB (PA-CB- E&I)
  • In future, any authorised PA which wants to commence PA-CB activity shall seek approval from RBI prior to commencement of such business. This shall also be applicable for any authorised non-bank PA-CB which wants to commence PA activity. In other words, a single authorisation will be required by a non-bank to undertake PA and PA-CB activity.

What are the net-worth requirements for PA-CB?

Non-banks providing PA-CB services as on October 31, 2023, minimum net-worth shall be -
  • At the time of application to RBI for authorisation - ₹15 crore  
  • By March 31, 2026 - ₹25 crore
New non-bank PA-CBs which have not commenced operations before October 31, 2023), minimum net-worth shall be -
  • At the time of application to RBI for authorisation - ₹15 crore
  • By end of the 3rd financial year from authorisation - ₹25 crore

What if required norms are not complied?

  • All existing non-bank PA-CBs which are not able to comply with the networth requirement or do not apply for authorisation within the stipulated time frame, shall wind-up PA-CB activity by July 31, 2024.
  • Banks shall close accounts (used for PA-CB activity) of non-bank PA-CBs (existing as on October 31, 2023) by July 31, 2024 unless the PA-CBs produce evidence regarding application for authorisation submitted to RBI.

What are category-wise guidelines for Import and Export PA-CBs?

Import only PA-CBs

  • Import only PA-CB shall maintain an Import Collection Account (ICA) with an AD Category-I scheduled commercial bank.
  • Payment for imports shall be received in an escrow account of the PA. These payments shall then be transferred to the ICA of the PA-CB. 
  • Onward transfer to the foreign merchants shall be carried out only by debit to the ICA.
  • PA-CBs shall undertake Customer Due Diligence of merchants (i.e. directly onboarded merchants located abroad, e-commerce marketplaces or entities providing PA services abroad).
  • In case per unit goods / services imported is more than ₹2,50,000, the concerned PA-CB shall undertake due diligence of buyer also.
  • Payments for imports can be carried out using any payment instrument provided by authorised payment systems in India, except small PPIs.

Export only PA-CBs

  • Export only PA-CB shall maintain Export Collection Account (ECA) – denominated in Indian Rupees (INR) and / or foreign currency (i.e. non-INR) – with an AD Category-I scheduled commercial bank. 
  • An ECA for each non-INR currency shall be maintained separately.
  • All export proceeds shall be credited to the relevant currency ECA of the PA-CB.
  • Proceeds from ECA shall be settled only in the account of merchant.
  • Settlement in Non-INR currencies shall be permitted only for those merchants which have been directly onboarded by the PA-CB.
  • PA-CBs shall undertake Customer Due Diligence of merchants (i.e. directly onboarded Indian merchants, e-commerce marketplaces or entities providing PA services).

Import and Export PA-CBs

  • Requirements as applicable to both Import only PA-CBs and Export only PA-CBs shall be applicable to Import and Export PA-CBs. 
  • Separate collection accounts – ICA and ECA – shall be maintained for facilitating import and export transactions.

What are other timelines for PA-CB?

  • AD Category-I banks undertaking PA-CB activity shall ensure compliance with the requirements for PA-CBs by April 30, 2024.
  • Non-bank PAs – authorised as well as those whose applications for authorisation are pending with RBI – shall advise RBI within 60 calendar days from October 31, 2023, about their existing PA-CB activity and whether, or not, they would want to continue it. If they wish to continue, they shall seek an approval from RBI for the same.
  • If an authorised PA-CB desires to change its activity category, it shall inform RBI atleast 60 calendar days prior to commencement of business in such new activity category. It shall commence the new business only after approval from RBI for the same.

What are other guidelines for PA-CBs?

  • As a pre-requisite for seeking authorisation from RBI, all non-bank PA-CBs (existing as on October 31, 2023) shall register themselves with the Financial Intelligence Unit-India (FIU-IND). 
  • In case a PA-CB also engages in domestic PA activity, ICA and ECA shall be kept separate from the escrow accounts opened for such PA activity. 
  • In respect of import and export transactions processed by PA-CBs, the maximum value per unit of goods / services sold / purchased shall be ₹25,00,000.
  • All other instructions issued by RBI regarding PAs shall apply mutatis mutandis to PA-CBs.


References

Reserve Bank of India. (2023, October 31). 'RBI issues circular on Regulation of Payment Aggregator – Cross Border (PA - Cross Border)'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=56662

Reserve Bank of India. (2023, October 31). 'Regulation of Payment Aggregator – Cross Border (PA - Cross Border)'. Retrieved from https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12561&Mode=0


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