RBI’s draft rules for payment aggregators may impact business models, say experts

On April 16, the RBI proposed regulations for payment aggregators who handle physical point-of-sale services, including minimum net worth requirements and a timeline for compliance.

The Reserve Bank of India’s new draft regulations for payment aggregators (PA) if implemented in its entirety could impact the business models of fintechs and Point of Sale (PoS) operators, which will now come under the regulations, said experts.

Sharat Chandra, Founder, EmpowerEdge Ventures, highlighted that some provisions in the RBI draft circular like restricting the storage of transaction data to card issuers and card networks only can have significant business model and cost implications for stakeholders such as payment gateways and fintechs.

“All non-bank PAs are required to register with the Financial Intelligence Unit-India (FIU-IND) and provide necessary information and are also required to monitor merchant transactions and ensure that marketplaces do not collect and settle funds for services not offered through their platform. These provisions will further increase the compliance burden and cost of operations for payment aggregators,” Chandra said.

Also read: RBI seeks comments on draft rules to regulate payment aggregators

The proposed rules
On April 16 the RBI proposed regulations for payment aggregators, which handle physical PoS services, that include minimum net worth requirements and a timeline for compliance.

The RBI also said that banks which provide physical payment aggregator services must ensure that they comply with regulations within three months — by July 16. The non-bank entities providing physical payment aggregator services must inform the RBI of their intent to seek authorisation within 60 days.

“The RBI has introduced guidelines for licensing third-party PoS operators to streamline offline payments. The proposed rules will impact players such as PineLabs Demo, Mswipe Technologies, Paytm, BharatPe and other third-party PoS solution providers,” said Manish Mishra, Co-founder and CEO, GenZCFO.

Net worth of entities

The RBI said that non-bank entities offering physical PA services and looking to apply for licences must have a minimum net worth of Rs 15 crore at the time of submission of their application to the central bank. And by March 31, 2028, non-banks already offering these services must have a minimum net worth of Rs 25 crore and then maintain a net worth of Rs 25 crore at all times. Those who may not be able to comply with the net worth requirements ought to wind up their physical payment aggregator services by July 31, 2025, the RBI said.

Further, banks will close non-bank entities' accounts used for these services by October 31, 2025, if they are unable to produce evidence regarding applications for authorisation with the RBI, the central bank said.

Here, Chandra said that maintaining the net worth at all times would mean significant capital infusion. “Players with deep pockets can operate as payments will become capital intensive. The payment players will push back on networth requirements,” Chandra said.

KYC and governance

The RBI updated certain directions on payment aggregators related to know-your-customer (KYC), due diligence of merchants, operations in escrow accounts and more, as digital transactions have grown rapidly in recent years.

The RBI also said that all the regulations on governance, merchant onboarding, customer grievance redressal and dispute management framework, baseline technology recommendations, security, fraud prevention and risk management framework must be abided by within a period of three months.