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Directions on Regulation of Payment Aggregators (PAs)

Reserve Bank of India (RBI) has issued directions on regulation of Payment Aggregators (PAs).

Who is Payment Aggregator (PA)?

Payment Aggregator (PA) is an entity that facilitates aggregation of payments made by customers to the merchants through one or more payment channels through the merchant’s interface (physical / virtual) for purchase of goods, services or investment products, and subsequently settles the collected funds to such merchants. 

What are the categories of PA?

  • PA – Physical (PA-P) – PA that facilitates transactions where both the acceptance device and payment instrument are physically present in close proximity while making the transaction.
  • PA – Cross Border (PA-CB) – PA that facilitates aggregation of cross-border payments for current account transactions, that are not prohibited under Foreign Exchange Management Act, 1999 (FEMA), for its onboarded merchants through e-commerce mode. The 2 sub-categories of PA-CB are –
    • PA-CB facilitating inward transaction (i.e. transaction involving inflow of foreign exchange)
    • PA-CB facilitating outward transaction (i.e. transaction involving outflow of foreign exchange)
  • PA – Online (PA-O) – PA that facilitates transactions where the acceptance device and payment instrument are not present in close proximity while making the transaction.

Which entities / transactions are not covered under PA-CB?

  • A non-bank entity authorised as AD Category-II, and facilitating current account transactions not prohibited under FEMA (other than purchase or sale of goods or service), shall not fall within the purview of PA-CB business.
  • A card transaction, where the foreign exchange settlement is facilitated by a card network and the aggregator receives the payment in local currency, is not part of PA-CB activity.

What is Payment Gateway (PG)?

Payment Gateway (PG) is an entity that provides technology infrastructure to route and facilitate processing of a payment transaction without any involvement in handling of funds.

To whom shall the direction be applicable?

The directions shall apply to –

  • Bank and non-bank entities undertaking the business of PA. 
  • Authorised Dealer banks as well as Scheduled Commercial Banks which engage with entities undertaking PA business.

What are the authorisation requirements for PAs?

  • A bank does not require authorisation to carry out PA business.
  • A non-bank entity shall seek authorisation for operating as a PA. An entity, regulated by any of the financial sector regulators, shall apply along with a No Objection Certificate (NOC) from such regulators, within 45 days of obtaining the NOC.
  • A non-bank PA shall be a company incorporated in India under the Companies Act, 2013. 

What if an entity is already undertaking PA business?

  • PA having a Certificate of Authorisation (CoA) issued by RBI, and
    • already carrying on business as a PA-P – shall intimate RBI and a revised CoA shall be issued to the PA.
    • desirous of commencing business in another PA category – shall intimate RBI at least 30 days prior to commencing the new business.
  • An entity, whose application for grant of CoA for PA-O or PA-CB is under consideration of RBI, shall intimate RBI about its existing PA-P business, if any, by December 31, 2025.
  • An entity carrying on only PA-P business shall apply for authorisation by December 31, 2025. An entity which fails to apply by the due date shall intimate its bankers forthwith and wind up its business by February 28, 2026.

How much shall be the net worth of PA?

  • An entity seeking authorisation to commence or carry on PA business shall have a minimum net-worth of ₹15 crore at the time of tendering application for authorisation; and shall attain a minimum net-worth of ₹25 crore by the end of third financial year of grant of authorisation.
  • The minimum net-worth shall be maintained by a PA on an ongoing basis.

What are specific directions for PA-CB?

  • Funds related to inward and outward transactions shall be kept separate. No co-mingling of funds or netting off for outward and inward transactions is permitted.
  • For outward transactions, a PA-CB may directly on-board merchants located abroad or enter into agreement with e-commerce marketplaces or entities providing PA services abroad. 
  • Outward transactions can be carried out using any payment instrument provided by authorised payment systems in India, except small Prepaid Payment Instrument.
  • A PA-CB shall not purchase foreign currency from, or sell it to, any entity other than an Authorised Dealer (AD). In respect of inward or outward transactions processed by a PA-CB, the maximum value per transaction shall be ₹25 lakh.
  • Settlement in non-INR currencies shall be permitted only for those merchants (Indian exporters) which have been directly onboarded by the PA-CB facilitating inward transactions.

What are the directions on escrow accounts of PAs?

  • A non-bank PA shall maintain the funds collected on behalf of its merchants in a separate escrow account with any Scheduled Commercial Bank in India. 
  • In case of a PA-CB, such account shall also be referred to as Inward Collection Account (InCA) for inward transactions and Outward Collection Account (OCA) for outward transactions. 
  • The escrow account shall not be operated for ‘Cash-on-Delivery’ transactions.
  • In case a PA-CB also engages in domestic PA activity, InCA and OCA shall be kept separate from the escrow accounts opened for such domestic PA activity.
  • For banks, the outstanding balance in the escrow account shall be part of the net demand and time liabilities (NDTL) for the purposes of maintenance of reserve requirements. 
  • Credits towards reversed transactions (where funds are received by PA) and refund transactions shall be routed back through the escrow account unless the refund is directly managed by the merchant and the payer has been made aware of the same. 

What are other directions?

  • A PA shall have a dispute resolution mechanism to handle payment related disputes, including timelines for processing refunds, etc. The policy shall ensure adherence to the instructions issued by RBI including on Turn Around Time (TAT) for resolution of failed transactions.
  • The PA shall appoint an officer responsible for responding to issues raised by its merchants along with an escalation matrix for grievance redressal. Details of the officer and escalation matrix shall be displayed on its website.
  • A PA business shall not carry out marketplace business.
  • A PA shall ensure that any charges, other than the price of goods / service / investment amount, charged by a merchant, are distinctly displayed to the payer prior to the transaction.
  • A PA shall not place limits on transaction amount for a particular payment mode. The responsibility thereof shall lie with the issuing bank / non-bank entity.
  • A PA shall not give an option for ATM PIN as a factor of authentication for card-not-present transactions.
  • All refunds shall be made to the original method of payment, unless specifically instructed by the payer to credit the refund to an alternate mode belonging to the same payer.
  • A PA may avail services of a PG.


References

Reserve Bank of India. (2025, September 15). 'Master Direction on Regulation of Payment Aggregator (PA)'. Retrieved from https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12896&Mode=0

Reserve Bank of India. (2025, September 15). 'RBI issues the Reserve Bank of India (Regulation of Payment Aggregators) Directions, 2025'. Retrieved from https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=61218


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