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The Reserve Bank of India (RBI) on Thrusday has offered another window to payment aggregators (PAs) existing as of March 2020 to apply to the central bank for a license. PAs can now apply for a license by September 30, 2022 and should have a minimum net worth of Rs 15 crore as on March 31, 2022, RBI said in a release on Thursday.
“Keeping in view the disruption caused by the Covid-19 pandemic, and to ensure smooth functioning of the payments ecosystem, it has since been decided to allow another window to all such PAs (existing as on March 17, 2020) to apply to RBI,” RBI said.
The PAs will be permitted to continue their operations till they receive communication from RBI regarding the fate of their application. However, RBI said, the timeline of March 31, 2023 for achieving the net worth of Rs 25 crore shall remain.
Several payment providers such as Razorpay, Pine Labs, Stripe, 1Pay, and Innoviti Payments have received in -principle nod from the RBI for a PA license. More players are also expected to get the central bank’s nod for the payment aggregator license.
In 2020, RBI issued guidelines that stated only firms approved by the regulator can acquire and offer payment services to the merchants. While banks do not need separate approvals, non-bank entities offering payment aggregator services had to apply for authorisation to the RBI by June 2021, which was later extended. The central bank had, however, allowed them to continue their operations till they received communication from the regulator regarding the fate of their application.
The central bank had specified the criteria the entities have to fulfil to secure such a license and a number of firms have seen their applications being rejected while many have also got the nod from the RBI. According to some reports, about 180 applications were made to the RBI, among which a number of applications have been rejected and quite a few have been given the nod.
“It is observed that applications received from some PAs had to be returned as they had not complied with eligibility criteria, including the minimum net worth criterion of Rs 15 crore by March 31, 2021. This also implied that they have to discontinue their operations within a period of six months from the date of return of application,” the central bank said.
“Though they have the option to apply afresh on meeting the prescribed criteria, ceasing operations may lead to disruption in payment systems. It is also possible that some PAs had not applied to RBI due to non-fulfilment of eligibility criteria,” it added.
Payment aggregators are entities that facilitate e-commerce sites and merchants to accept various payment instruments from the customers for completion of their payment obligations without the need for merchants to create a separate payment integration system of their own.
They facilitate merchants to connect with acquirers. In the process, they receive payments from customers, pool and transfer them on to the merchants after a time period.
According to RBI guidelines, payment aggregators need to have a net worth of Rs 15 crore by March, 2021, and a net worth of Rs 25 crore on or before March, 2023. And, they have to maintain a net worth of Rs 25 crore at all times thereafter.
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