The Reserve Bank of India (RBI) given payment aggregator (PA) and payment gateway (PG) licences in principle to Razorpay, Pine Labs and American payments player Stripe, according to a Moneycontrol report. The companies have become the first players to receive such a licence. For the final licence, they have to conduct an audit within the next six months.
The central bank is soon likely to release a complete list of the players who have been approved to operate as payment aggregators in the country shortly, according to an ET report quoting sources.
According to the latest guidelines issued in March 2020, the RBI mandates that all PAs will be authorised by the RBI. The rules have made it a must for all payment gateways including Stripe, BillDesk, Razorpay and Cashfree, among others, to acquire a licence to continue. For this, the regulator instructed non-bank companies offering PA services to apply for authorisation by June 30, 2021, which was later postponed to September 30, 2021.
BharatPe, Tata Group, PhonePe, Cred, Zomato and Amazon also applied to get the licence. In the absence of the license, e-commerce and other players will either have to have a tie-up with a bank that can aggregate payments on their behalf (it will increase costs) or will have to depend on a PA, leading to more business for these licensed entities.
In the Discussion Paper on Guidelines for Payment Gateways and Payment Aggregators, the RBI has said Payments in the online space are facilitated by a number of intermediaries like the payment gateways and payment aggregators. These intermediaries act as the bridge between the providers of goods/ services (merchants) and those that require them (customers). For a successful online experience, the role of such intermediaries is crucial.
Extant regulation in this area, albeit indirect, were issued by Reserve Bank of India (RBI) during November 2009 which required banks to maintain a nodal account of the intermediaries with permissible credits and debits as also the settlement cycle for credit to the merchants. This nodal account was required to be in the form of an ‘internal account’ of the bank.
Payment Gateways and Payment Aggregators may also provide services which include generation of settlement via netting of the funds received by the merchants onboarded by them. By being the bridge between consumers at one end and merchants at the other end, these service providers play a role in processing and completion of the payment transactions. They could be engaged by a bank, a merchant, or a biller (utility company, telco, etc.), according to the discussion paper before the guildelines were issued.
“The activities of Payment Gateways and Payment Aggregators in online transactions are extremely crucial. Entities may be a source of risk in such a technology and customer experience intensive business if they have inadequate governance practices which may impact customer confidence and experience,” it had said.
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