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Payment Aggregator vs. Account Aggregator. How they are different?

Ankit Mishra

| Updated: Jul 12, 2022 | Category: Payment Bank License

Payment Aggregator vs. Account Aggregator

There are numerous benefits of using online payment and database solutions; it is an effective and efficient solution to the wastage of time and effort in providing payment solutions to the end-users and financial entities. However, there are sometimes confusion amongst the masses regarding terminologies used whilst looking for specific financial services. One such conundrum exists in the debate of Payment Aggregator vs. Account Aggregator. While these terms may sound familiar, they are disparate from each other in every aspect.

Payment Aggregator vs. Account Aggregator: Meaning and Scope

Before getting into Payment Aggregator Vs. Account Aggregator wrangle, it is of paramount importance that we know their meaning and scope.

Concept of Payment Aggregator

A Payment Aggregator (also known as Merchant Aggregator) is an online payment solutions interface that acts as an intermediary between merchants and their customers. It helps in facilitating swift and convenient online payments. A Payment Aggregator platform helps merchants to receive payments from their customers against their purchase of goods or services. A payment aggregator enhances the overall payment experience by acting as a centralised platform for different payment methods, while also providing security to such financial transactions. Payment aggregation platforms are offered by banks and RBI-approved Non-Banking Financial Companies (NBFCs). The basic difference here is that the latter has to obtain a Payment Aggregator License from the RBI to operate in the territory of India, while banks do not have such additional licensing requirement.

Meaning of Account Aggregator

An Account Aggregator is a type of NBFC regulated by the Reserve Bank of India that helps individuals and entities securely access and share financial data amongst themselves. The data transfer is between a regulated financial institution to another regulated institution looking for the financial profile of a specific individual for lending or any other verification purpose. Account Aggregators cannot share the required information without the due consent of the owner of such crucial financial information. They act as consent custodians, which helps in making this transfer secure and legal.  AAs act as an intermediary between the Financial Information Providers and Financial Information Users. NBFCs that have obtained Account Aggregator License can act as the repositories of financial information for every person who holds any financial data. As the data these entities deal with are sensitive, it is essential that they follow all the data protection laws and regulations made by the authorities in this regard.

Payment Aggregators vs Account Aggregators:Operational difference

A detailed assessment of the operational arena of these two entities is needed to settle the debate of Payment Aggregator vs. Account Aggregator

The operational structure of the Payment Aggregator

As mentioned above, a Payment Aggregator acts as an intermediary between the merchants and their customer. They provide secure payment channels to the customers, and operate in accordance with the Master Direction DPSS.CO.PD. No.1810/02.14.008/2019-20 dated March 17, 2020, issued by the Reserve Bank of India.Every Payment aggregator has to officially onboard merchants who have a physical presence in the country on their platform after performing their KYC [1]in an approved manner. The customers of the on boarded merchant partner have the option to pay the requisite sum using Debit Cards, Credit Cards, UPI, Net banking and any other payment mode as allowed. The Payment aggregator then settles the amount with the merchant on a T+2 basis. If the quantity of transactions is substantial, the amount may be settled in batches to avoid any transactional failures.

Operational Structure of Account Aggregators

On the other hand, account aggregators provide a connected financial ecosystem  to save precious time and paperwork done by the lending and other financial institutions in obtaining their customer’s consent to access their financial information. To achieve this task, the RBI, which is at the panopticon of its operations, has set out straight guidelines thataim at protecting sensitive public information without affecting the flow in which it is shared. The step-by-step process of how an Account Aggregator operates is as follows:

  1. FIU will generate a request to the Account Aggregator to share the desired financial data
  2. The AA must obtain the consent of the individual or entity whose data is being shared. It is done through a web-based or mobile-based client through a One Time Password(OTP). 
  3. Suppose the owner of financial data gives their consent to the flow of that data. In that case, the Account Aggregator will raise the request with the concerned FIP to release the Financial information related to the concerned person/entity.
  4. The FIP will provide the data in an encrypted manner to the Account aggregator, which will be transferred to the FIU.

Tabular Comparison Between Payment Aggregator vs. Account Aggregator:

FactorsPayment AggregatorAccount Aggregator
FunctionSafe and secured facilitation of payments between the Merchants and their customersProvides a systematic ecosystem for systematic sharing of financial data in a secure manner.
Entities InvolvedMerchants and Customers are the involved entities.Owner of financial data, FIU and FIPs, are the involved entities.
OwnershipA payment aggregator platform can be owned by the Public and Private Banks operating in the country and the non-banking entities, which requires additional licensing from the Reserve Bank of India.Account Aggregators are registered as Non-Banking Financial Companies and under the Companies Act and licensed by the Reserve Bank of India. 
Capital RequirementMinimum capital of INR 25 Crores is needed by the end of the third financial year, i.e. March 31 2023.INR 2 Crores is the Minimum Net Owned Funds requirement for Account Aggregators.
IT Infrastructural requirementsSpecific IT requirements include forming an IT governance platform as updated from time to time by the Reserve Bank of India.No specific IT guidelines, but the entity should be PCI DSS compliant.
Regulatory Authority InvolvedRBI regulates the working and compliance of Payment Aggregators.The RBI regulates all NBFCs, and the same goes for the Account Aggregators. 
ExamplesSome of the renowned Payment Aggregators are as follows BillDesk, PayU, Razorpay, CCAvenue, Cashfree Payments, Paytm, MobiKwik, BharatPe, PhonePe,Cookiejar Technologies Private Limited and NESL Asset Data Limited are some known Account Aggregators in India.

Conclusion

Payment Aggregator vs. Account Aggregator is an uneven comparison, as the entities involved are not related to each other in any manner whatsoever. Hence, it is important to point out that these same-sounding terms should be distinctively used by the masses as they have differences in every domain.  When it comes to the registration requirements, documents and eligibility, the two kinds of aggregators are significantly dissimilar. Therefore, companies that wish to set up an Account Aggregator or Payment Aggregator business must also seek assistance from experienced BFSI professionals before proceeding with the RBI registration process.

Read our Article: Points of Distinction between a Payment Aggregator & a Payment Gateway

Ankit Mishra

An Advocate by profession, Ankit holds ample experience in curating engaging and informative content relating to the BFSI, Blockchain and Global Expansion domains. He is also well-versed in drafting/vetting documents and holds a keen interest in cyber security laws, taxation, finance and regulatory norms.

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