RBI grants in-principal approval to Razorpay to operate as a payment aggregator

The Reserve Bank of India (RBI) has granted in-principle approval to the ‘Razorpay’, Stripe, Pine Labs, and 1Pato operate as a payment aggregators. Earlier, in order to ensure safety of merchants and consumers, the RBI had issued a payment aggregator framework in March 2020 stating that payment gateways will be mandated to have a license in order to acquire merchants and provide them with digital payments acceptance solutions.

Payment aggregators (PA) 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. PAs 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 as on March 2021, and a net worth of Rs 25 crore by on or before March 2023. And, they have to maintain a net worth of Rs 25 crore at all times thereafter.

The payment gateway works as the middleman between your customer and the merchant, ensuring the transaction is carried out securely and promptly. An online payment gateway can simplify how merchants integrate the necessary software. As the middleman during the payment processing, the gateway manages the customer’s sensitive card details between the acquirer and the merchant.

Getting the Reserve Bank of India’s (RBI’s) nod for payment aggregator’s licence essentially means that the entities would now be directly under the purview of the RBI in rendering payment services to merchants.

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