Payment Gateway License

Go through the following reasons to acquire a payment gateway license:

1. A payment gateway license is mandatory, as per the Reserve Bank of India, to operate a company as a payment gateway.
2. You can raise capital by demonstrating your seriousness and authenticity to the investors and credit institutions in the market.
3. It helps you build a separate brand identity in the market because customers trust a brand or company that follows all the governmental mandates.

The process for a license for payment gateway is as follows:

1. Draft legal documents like the MOA and the AOA
2. Obtaining a director identification number (DIN) and a digital signature certificate (DSC)
3. Registration of the company with the MCA.
4. Establishment of IT infrastructure in accordance with the Reserve Bank of India (RBI).
5. Filing of the application with mandatory documents.
6. Examination of the application and subsequent issuance of authorization of the certificate in Form B, permitting the applicant to operate as a payment gateway operator. (in-principle approval).
7. Final registration of the certificate is granted by the RBI for payment gateway license after the end of the six-month period.

Yes, operating without authorization will amount to serious legal actions, including cancelation of your company’s registration and possible criminal/civil charges.

The entire process takes from preparing documents, filing the application, establishing the technical infrastructure, and in-principle approval takes around six months. Once you fulfil all the conditions during the six months, the RBI will grant you the certificate of registration.

The list of documents needed for a payment gateway license is as follows:

1. Memorandum of Association
2. Articles of Association
3. A certificate of registration (ROC) from the MCA
4. Director’s identification number
5. Digital signature certificate
6. A fit and proper certification for all directors and promoters
7. A goods and services tax (GST) certificate
8. PCI-DSS compliance declaration
9. A lease agreement or rental space agreement as address proof.
10. Details of your current bank accounts.

This compliance includes a set of policies and rule that determine the procedure to optimize the digital payment through credit cards, net banking, and debit cards simultaneously taking effective measures to prevent fraud and suspicious activities.

Any Indian company registered under the Companies Act of 1956/2013 with a minimum net worth of INR 15 crore, a five-year business plan, with an RBI-mandated technical infrastructure.

The Reserve Bank of India is the primary authority that authorizes entities to operate as payment gateways.

Yes, with the fast-growing e-commerce industry, payment gateway entities are in huge demand.

The applicant company has a net worth of INR 15 crore at the time of application.

According to the available data, as of September 2023, NBFC microfinance organizations comprise 41% of the market share in India's microfinance sector, with banks accounting for 30%. It is noteworthy that since 2020, NBFCs' market share has grown considerably.

A company with a legit payment gateway license should’ve a net worth of 25 crore by the end of the third financial year as a PG in India. Any noncompliance will end in the revocation of the RBI’s permit.

Yes, in accordance with the latest RBI developments, all companies engaged in digital payment transactions must provide two-factor authentication for users and merchants. It must be something that the said customer/merchant knows of, including biometrics, password, OTP based SMS, or a pin.

The list of services other than seamless payments includes the following:

1. Advanced visual systems check.
2. Computer fingerprinting technology.
3. Delivery address verification
4. Velocity pattern analysis
5. Identity morphing detection
6. Computation of tax for authorization of the request transmitted to the processor.

A payment gateway acts as an intermediary between a merchant, online marketer, and customer. It facilitates payment processing between different parties. Some key features are as follows:

• All the sensitive financial information (card details and passwords) is exchanged through encrypted servers.
• It is capable of facilitating payment through various methods, including credit/debit cards, net-banking, mobile banking, and UPI.
• This system can be established on any type of digital platform, including online marketplaces, e-commerce shopping apps, with the help of an application programming interface (API).
• The system is built to support recurring and automatic payments from regular customers.

A payment gateway keeps the information secure in the following ways:

• The transaction is done through an HTTPS web address.
• The system acts on a signed request through the merchant. This information is kept between the merchant and the gateway.
• Subsequently, the IP is verified to detect any fraudulent or malicious activity.
• Followed by virtual payer authentication (VPA), which is done, meaning the person making the payment is sent a verification one-time password or a related identifier as set by the payment maker.