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The Basic &Primary Act governing pre-paid instruments in India is Payment & Settlements Act, 2007. The provisions of Master Direction will apply to Prepaid Payment Instruments issuers, system providers & technology participants.
Master Directions shall be therefore called as the Reserve Bank of India (Issue & Operation of Prepaid Payment Instruments) Directions, 2017.
These directions lay down the legal framework & criteria for holding & issuance of Semi closed & open prepaid payment instruments in the country.
Authorization of RBI in this regard is a Prerequisite.
Henceforth, PAYMENTS & SETTLEMENTS ACT, 2007 provides for an illustrative framework for approval of E-wallets & digital prepaid mechanism.
A payment gateway is a merchant service provider through an E-commerce platform for processing & furtherance of Debit & Credit Card Payments affected by the masses, business houses & other concerned.
It is responsible for quick, safe transfer of funds from buyer to seller.
This data is secured on a server or database which is kept confidential & only persists between buyer, seller & concerned bank. Pre-requisites for this are:
It is an auto-checkout mechanism in order to effect transactional payments for web-based merchants. All the major payment gateways support all sorts of payment facilities for closing the transaction.
A). Best way to start a Payment Gateway or aggregator service is to register it as a Private Limited Company under Indian Companies Act, 2013.
B). Application of PAN Card, GST Registration No. & opening of Current Bank Account of the Company.
C). Compliance with the standards of Payment Card Industry Data Security Standard (PCI DSS) for the security of credit information.
D). Application for license or merchant service provider or payment facilitator with Banks; depending upon the credibility & financial soundness of applicant, Banks shall grant the approval for payment alignment.
Alternatively, in case of Internet banking, an aggregator license is what is required from individual banks which is a tedious process.
E). Once the licenses are in custody and approvals are sorted one can start with operations.
F). Overall Cost for installation of a Payment Aggregator anywhere is between 30 Lacks to 1 Crore depending upon the capital adequacy.
Back then the topic of Payment Gateway was in its infancy, but due to a revolution in E-Commerce & Digital Wallet facility, it has phenomenally taken the markets with storm & still the unused capacity needs to get tapped.
Read our article:Points of Distinction between a Payment Aggregator & a Payment Gateway
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