Over 50 entities get in-principle approval for PA license; 28 under review

32 of those granted interim nod were already operating as online payments aggregators, 19 are new to the business

The Reserve Bank of India (RBI) has granted in-principle approval to over 50 entities for a payment aggregator’s license so far, while 28 applications are still under review, the central bank said on Wednesday, when it published the list of entities that applied for the license.

Of the 50-odd entities that have received in-principle authorisation from the central bank, as many as 32 have already been operating as online PAs, while 19 are new to the business.

RBI has advised consumers to deal with only existing PAs who have been granted in-principle authorisation or whose application is under process. They can transact with new PAs only after the latter have received ‘authorisation’.

Applications of four entities--Paytm Payments Services Ltd, PayU Payments Pvt Ltd, Freecharge Payment Technologies Pvt Ltd, and Tapits Technologies Pvt Ltd--have been returned by the RBI. However, they can reapply for the license within 120 days. These entities can continue business provided that no new merchants are onboarded until advised otherwise by the central bank.

Meanwhile, RBI has returned as many as 57 applications and has asked the entities not to operate as PAs.

Existing online PAs that have received RBI's in-principle nod include Amazon (Pay) India, Google India Digital Services, Pine Labs, Reliance Payment Solutions, Zomato Payments, and Infibeam Avenues, among others.

New entities that have received the in-principle nod include Groww Pay Services, Hitachi Payment Services, Juspay, TATA Payments, and Zoho Payment Technologies, among others.

According to RBI, an ‘in-principle’ authorisation should not be construed as a licence unless the entity is granted ‘authorisation’ under Section 7 of the Payment and Settlement Systems Act, 2007.

For the purpose of ‘authorisation’, the entity would have to submit to RBI a System Audit Report (SAR), along with a certificate from a chartered accountant regarding compliance with the net worth requirement. The entities must also have to comply with other requirements under the guidelines and fulfil additional conditions, if any, stipulated by RBI, the central bank clarified.

RBI has said while the scrutiny of PA applications is an ongoing process, the central bank has, in order to disseminate information and ensure greater transparency, published the list of entities that have applied to it for authorisation to act as online PAs, as on February 15. This list will be updated on a fortnightly basis.

Payment Aggregators are entities that enable e-commerce sites and merchants to accept various payment instruments from customers for the completion of their payment obligations. These entities facilitate merchants to connect with acquirers.

Back in 2020, RBI issued guidelines under which only firms approved by it could 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 from RBI by June 2021. This date 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 RBI allowed another window for payment aggregators existing as of March 2020 to apply to the central bank for a license. Payment Aggregators were asked to apply for a license by September 30, 2022.

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.