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RBI proposes norms to regulate payment gateways and payment aggregators


The Reserve Bank of India (RBI) has come out with discussion paper for regulating the activities of online payment intermediaries like Payment Aggregators and Payment Gateways.

The proposed norms expressed concern over the activities of Payment Gateways and Payment Aggregators in online transactions.

Entities may be a source of risk in such a technology and customer experience intensive business if they have inadequate governance practices, said the RBI Discussion Paper on Guidelines for Payment Gateways and Payment Aggregators.

The lack of proper redress mechanism and uniformity in practice across the entities is also a matter of concern; it further added.

To address the concerns, RBI discussion paper proposed three options- First, to continue with the extant instructions with minor changes and clarify the applicability of the guidelines. Second, Limited regulation. Third, Full and Direct Regulation.

For Direct regulation, It proposed Payment Gateways and Payment Aggregators be authorised under the Payment and Settlement Systems Act, 2007 (PSSA). They, if required, maintain the funds received from customers in an escrow account with a scheduled commercial bank.

For entities, which want to undertake Payment Aggregation and Payment Gateway activity, shall be a company incorporated in India under the Companies Act, 2013.

These entities will be given one financial year to comply with the entry point norms and other technology, security, storage norms.

“Existing Payment Aggregators shall, within one year after the issuance of guidelines by RBI, comply with Rs 100 crore net-worth requirement,” said the RBI proposal. The firms not able to comply with the net-worth requirement within the stipulated time frame, need not apply for authorisation, it added.

They will also have to appoint a Nodal Officer responsible for regulatory and customer grievance handling functions, whose details will be displayed on their website.

In Feb 2018-19 Monetary Policy Statement, RBI had said that the existing guidelines for payment intermediaries would be reviewed.

The central bank invites comments on the policy paper from all stakeholders and members of the public by October 17.

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