After a year of waiting, RBI grants at least six payment aggregator licences (2024)
Updated - December 20, 2023 at 10:09 PM.| Mumbai
The final nod for the payment aggregator licence has come for Razorpay, CashfreePayments, Open Financial, EnKash, Google Pay and Paymate India, say sources
After over a year of waiting, the Reserve Bank of India (RBI) granted its final approval for at least six payment aggregator licences on December 19, thus lifting the ban on entities such as RazorPay and Cashfree Payments for acquiring new merchants.
The final nod for the payment aggregator licence has come for Razorpay, CashfreePayments, Open Financial, EnKash, Google Pay and Paymate India, sources told businessline.
The licences comes over a year after the central bank in December 2022 asked platforms which has in-principal approvals for a payment aggregator licence such as RazorPay, Cashfree Payments, PayU, PineLabs, Paytm and Stripe, among others, to stop on-boarding new merchants till additional documents and audit reports are submitted and a final licence is awarded.
Both RazorPay and Cashfree Payments said that following the receipt of the final approval, they will now be able to on-boardnew merchants on their paymentsgateway. The companies said they already have several merchants lined up, that have completed their KYC process and were waiting for the ban to be lifted to be onboarded onto the platform.
Paytm and PayU India are still awaiting their final approvals, as per industry sources. Prior to the temporary curbs, Razorpay, PayU India and Cashfreewere estimated to account for 70-80 per cent of new merchant onboarding. The entities had received their in-principal licences July 2022 onwards.
As of December 16, the central bank had granted in-principle authorisation to 37 existingpayment aggregators, includingnames such as Zomato, Amazon Pay, NSDL and PhonePe, among others. In addition, six applications--including for Freecharge--are ‘under process’.
RBI had introduced thepayment aggregator framework in March 2020, which mandated that payment gateways will need to obtain an aggregatorlicense to acquire merchants and offer digital payment acceptance solutions.
Payment aggregators facilitate e-commerce websites, mobile apps, and merchants to accept various payment instruments from customers for their transactions, without the need for merchants to create their own payment interface.
After over a year of waiting, the Reserve Bank of India (RBI) granted its final approval for at least six payment aggregator licences on December 19, thus lifting the ban on entities such as RazorPay and Cashfree Payments for acquiring new merchants.
Payment aggregators secure an aggregator license in India from the RBI for acquiring merchants and enabling them with infrastructure to accept and disburse digital payments. To enable various payment methods on your own, your business would have to partner with various banks and non-banking financial companies (NBFCs).
Non-bank entities seeking licenses for physical payment aggregator services must maintain a minimum net worth of Rs 15 crore at application submission. By March 31, 2028, existing non-bank entities in this space must have a net worth of Rs 25 crore and maintain it afterwards.
The entities had received their in-principal licences July 2022 onwards. As of December 16, the central bank had granted in-principle authorisation to 37 existing payment aggregators, including names such as Zomato, Amazon Pay, NSDL and PhonePe, among others.
It is only through these payment aggregators that customers are able to make payment via debit & credit cards, UPI, bank transfer. These payment aggregators include Amazon Pay, Razorpay, Paytm, Cashfree, PhonePe and GooglePay.
A payment gateway is a network that serves as a bridge between the merchant and the bank.The Payment Aggregator is a solution that streamlines end-to-end payment processes. Payment Gateways only allow card payments (debit/credit cards). The merchant must integrate each payment method or bank separately.
The Reserve Bank of India has approved NPCI Bharat BillPay Ltd to implement an interoperable payment system for internet banking transactions. The new system will facilitate quicker settlement of funds for merchants. It is expected to be launched during the current calendar year.
Now, how payment aggregators make money usually charge a monthly fee for using their platform. Moreover, they can charge fees for using services like instant settlement.
Some well-known non-bank payment aggregators in India include PayU, Paytm Payments Gateway, Instamojo, Razorpay, and BillDesk. E-commerce Platforms: Major e-commerce platforms in India, such as Amazon, Flipkart, and Snapdeal, have their own payment aggregation systems.
If you want to start accepting payments immediately and you're expecting a relatively low volume in the beginning, go with a payment aggregator. If your volumes are high and you don't mind spending some time on negotiating optimal terms for each separate agreement, you should definitely go with a merchant account.
To connect to the Account Aggregator network, the person's bank simply has to join. At present, eight banks—Axis, ICICI, HDFC, IndusInd Bank, State Bank of India, Kotak Mahindra Bank, IDFC First Bank, and Federal Bank—are already part of it.
Introduced in March 2020, RBI's payment aggregator framework mandates that only authorized entities can provide payment aggregation services to merchants. This means SabPaisa has now joined the likes of Juspay, Razorpay, Stripe, neo-bank Open and others in receiving the RBI nod for a payment aggregator authorization.
Shopping for goods and services on the internet is the main driver for payments made online through both UPI transactions and payment cards. India's e-commerce market is projected to grow from $83 billion in 2022 to $150 billion in 2026.
In India, payment options encompass a wide range. These include cash, credit and debit cards, UPI (Unified Payments Interface), mobile wallets, NEFT (National Electronic Funds Transfer), RTGS (Real Time Gross Settlement), IMPS (Immediate Payment Service), and even digital currencies like Bitcoin.
The 6 Payment Banks in India are: Airtel Payments Bank Limited, India Post Payments Bank Limited, Fino Payments Bank Limited, Paytm Payments Bank Limited, Jio Payments Bank Limited, and NSDL Payments Bank Limited.
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