RBI Notification

Guidelines mandated by RBI on Regulation of Payment Aggregators

Payment Aggregators

Payment Aggregators and Payment Gateways are intermediaries which play an important role in facilitating payments in the online space.

On 17th March 2020, the Reserve Bank of India has put across before the e-commerce industry stringent guidelines for regulating payment aggregators and payment gateways vide circular RBI/DPSS/2019-20/174-DPSS.CO.PD.No.1810/02.14.008/2019-20. These guidelines are issued in continuation to the RBI’s directions for opening and operation of accounts and settlement of payments for electronic payment transactions involving intermediaries.

These guidelines aim to regulate through formal means, the entities handling funds of customers and e-commerce payments.

It may be noted that these guidelines are issued under Section 18 read with Section 10(2) of the Payment and Settlement Systems Act, 2007 and shall come into effect from April 1, 2020.

The main focus recommendations are given with regard to governance, capital requirements, applicability, authorisation, provisions of merchant on-boarding, settlement and escrow account management, customer grievance redressal and dispute management framework, security, fraud prevention and risk management framework, and so on.

Matters contained in the RBI Guidelines for Payment Aggregators

Incorporation under the Companies Act, 2013:

The guidelines issued by RBI clearly state that a payment aggregator must be a company incorporated under the Companies Act, 2013 in India. The entities that facilitate, e-commerce sites and merchants operating over e-commerce platforms to accept various payment instruments, need to be incorporated as a company in India via corporate rules.

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Authorisation for non-bank PAs:

Bank and non-bank payment aggregators handle funds as part of their activities. Banks offer PA services as part of their normal banking relationships and do not, therefore, need a distinct authorisation from RBI. Non-bank PAs shall require authorisation from the RBI under the Payment and Settlement Systems Act, 2007 (PSSA).

It is also clarified under the said guidelines that non-bank entities offering payment aggregator services will have to apply for authorisation for the same on or before 30th June 2021. They shall be allowed to continue their activities until they receive communication from RBI concerning the status of their application.

Certification from Chartered accountants:

Payment aggregators need to submit a certificate in the prescribed format from their Chartered Accountants (CA) to evidence compliance with the applicable net-worth requirement while submitting the application for authorisation.

Separation from marketplace business:

The RBI has also provided that ‘e-commerce marketplaces’ offering payment aggregator services will have to be separated from the ‘marketplace business’ and shall be required to apply for authorisation on or before 30th June 2021. A few most common examples of e-commerce marketplaces which run payment aggregator businesses in complete dissociation from entities operating under the marketplace models are PhonePe, Flipkart and Paytm.

Net worth requirements:

The net worth requirements are streamlined and an adequate time of one year is provided to comply with Rs. 15 crores net worth requirement for all extant payment aggregators and payment gateways. The RBI also said that the applicants need to have Rs. 15 crores of net worth, which needs to be enhanced to Rs. 25 crores within 3 years of operations.

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Specified financial requirements to be met by existing payment aggregators are as follows:

Limit of net worth
To achieve a net worth of Rs. 15 crores by 31st March 2021
To achieve a net worth of Rs. 25 crore by 31st March 2023
To maintain a net worth of Rs. 25 crores at all times thereafter

The new PAs shall have a minimum net-worth of Rs. 15 crore at the time of application for authorisation and shall attain a net-worth of Rs. 25 crores by the end of 3rd financial year of grant of authorisation.

The PAs which are not able to comply with the stipulated net-worth requirement within the prescribed time frame shall wind-up payment aggregation business.

The RBI has reduced the capital requirements for payment aggregators, from the earlier proposal of Rs. 100 crore to Rs. 15 crores, which is needed at the time of application for obtaining a license. This has come as a relief to the payments industry since many smaller payment companies could move out of this aggregation business due to their incapability to meet the Rs. 100 crore net worth requirement.

Governance Requirements:

The PAs need to be managed professionally. The promoters of the entity need to satisfy the fit and proper criteria prescribed by RBI. The directors of the applicant entity need to submit a declaration in the format prescribed.

The agreements between PAs, merchants, acquiring banks, and all other stakeholders shall clearly delineate the roles and responsibilities to be performed by them in sorting/ handling complaints, addressing refund/failed transactions, return policy, customer grievance redressal, dispute resolution mechanism, reconciliation, etc.

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The payment aggregators will have a Board approved policy for the disposal of complaints, dispute resolution mechanism, the time-lines for processing refunds, etc.

Background check of Merchants:

The RBI has also formalised that the payment aggregators will conduct background and antecedent check of their merchants, to ensure that the merchants do not have any malafide intention of duping customers, and do not sell fake/counterfeit/prohibited products, etc.

Security guidelines:

The payment aggregators have also been asked to ensure adherence to strict security guidelines, and comply with all KYC (Know Your Customer) and AML (Anti-Money Laundering) rules. The PAs shall put in place adequate information and data security infrastructure and systems for the prevention and detection of frauds.


The RBI asserts that the guidelines are significant in ensuring proper regulation of payment aggregators and payment gateways and to bring them under its direct supervision. The overall vision of less-cash society is strived to be strengthened for the transition of industry players, by virtue of these RBI guidelines.

For official notification, see here:


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