RBI gives payment aggregators another window till Sep to apply for licence

PAs should have a minimum net worth of Rs 15 crore as on March 31, 2022

The Reserve Bank of India (RBI) has allowed another window to payment aggregators (PAs) existing as of March 2020 to apply to the central bank for a licence. PAs could now apply for a licence 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 been decided to allow another window to all such PAs (existing as on March 17, 2020) to apply to the RBI,” the central bank said.

The PAs will be permitted to continue their operations till they receive communication from the RBI regarding the fate of their application. However, the RBI said the timeline of March 31, 2023, for achieving the net worth of Rs 25 crore would remain.

Several payment providers like Razorpay, Pine Labs, Stripe, 1Pay, and Innoviti Payments have received in-principle approval from the RBI for a PA licence. More players are also expected to get the central bank’s clearance for a payment aggregator licence.

Back in 2020, the RBI issued guidelines that said only firms approved by the regulator could acquire and offer payment services to merchants. While banks do not need separate approvals, non-bank entities offering payment aggregator services had to apply to the RBI for authorisation by June 2021, a deadline that 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 needed to fulfil to secure such a licence and a number of firms had seen their applications being rejected while many had also got the RBI’s approval. According to some reports, 180 applications were made to the RBI; a number of these were rejected and a few approved.

“It is observed that applications received from some PAs had to be returned as they had not complied with the eligibility criteria, including the minimum net worth criterion of Rs 15 crore by March 31, 2021. This also implied that they had 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 a disruption in payment systems. It is also possible that some PAs had not applied to the 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 customers for completion of their payment without the need for merchants to create separate payment integration systems of their own.

They facilitate merchants to connect with acquirers. In the process, they receive payments from customers, pool them, and transfer them to merchants after a time period.

According to the 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 by March 2023. And, they have to maintain a net worth of Rs 25 crore at all times thereafter.