The Reserve Bank of India (RBI) has mandated that payment aggregators and payment gateways maintain a minimum net worth of Rs 100 crore within a year of the issuance of these norms or else wind up operations, as part of the discussion paper.
“Entities not able to comply with the net-worth requirement within the stipulated time frame, need not apply for authorisation but shall wind-up payment aggregation business within one year of issuance of guidelines,” the Central Bank said in a discussion paper.
“Existing payment gateways and payment aggregators shall, within one year after the issuance of guidelines by RBI, comply with this net-worth requirement,” the regulator said.
Each entity also needs to appoint a nodal officer and formulate a customer grievance redressal and dispute management framework. The paper suggested that payment aggregators and gateways would need to be authorised/licensed by RBI under the Payments and Settlements Act, 2007.
The paper also proposed three different ways to regulate payment gateways and aggregators. First: to continue with existing directions. Second: to limit regulation in which payments aggregators and gateways shall follow RBI guidelines around major aspects. Third: payment aggregators and gateways be fully and directly regulated by RBI.
Currently, a number of companies like Paytm, Paypal, Instamojo, Citrus Pay, Atom Technologies and Razorpay offer payment gateway and aggregator services in the country.
Under the third approach, entities will have to follow a fresh set of norms. They need to ensure that merchants and they themselves do not pass on merchant discount rate (MDR) to the customer while accepting payments via debit cards. They must maintain funds in an escrow account with a commercial bank and only deal with merchants who have a physical presence in the country.
RBI also suggested that e-commerce marketplaces will have to be separated from the payment gateway or aggregator business.
“The primary business of these e-commerce marketplaces does not come within the regulatory ambit of RBI and in case of regulatory prescriptions for payment aggregators, they would end up being subjected to dual regulation. Hence, a separation of these two activities would entail a better regulatory approach / process,” the regulator said.
In February policy review, RBI had said that the existing guidelines for payment intermediaries would be reviewed. The Central Bank has invited comments on the policy paper from all stakeholders and members of the public by October 17.