RBI issues new guidelines for regulating payment aggregators

The Reserve Bank of India (RBI) on Monday, September 15, released new master directions to regulate payment aggregators (PAs) in India.

The RBI (Regulation of Payment Aggregators) Directions, 2025 provide a single framework for companies handling digital payments and come into effect immediately.

Categorisation of Payment Aggregators

The guidelines formally divide payment aggregators into three types:

• PA-O (Online): Aggregators facilitating e-commerce and other online transactions where the payment instrument and acceptance device are not in proximity.
• PA-P (Physical): Aggregators handling payments where both the payment instrument and acceptance device are physically present.
• PA-CB (Cross-Border): Aggregators managing cross-border payments, either inward or outward.

New Rules for Banks and Non-Banks

Banks can continue operating their PA business without fresh approvals. Non-bank players, including startups, must obtain authorization by December 31, 2025, or wind up operations by February 28, 2026.

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Eligibility Criteria for PAs

To qualify, payment aggregators must:

• Have a minimum net worth of ₹15 crore at application and ₹25 crore by the end of the third financial year.
• Maintain the net worth requirement on an ongoing basis.
• Comply with FEMA norms if receiving foreign investment.
• Submit a statutory auditor’s certificate confirming net worth compliance.

Governance and Risk Management

To improve accountability, PAs must:

• Conduct due diligence and KYC checks for merchants. PAN verification is allowed for smaller merchants (annual turnover < ₹40 lakh).
• Monitor merchant transactions to prevent fraud and prohibited activities.
• Appoint an officer to address merchant grievances and maintain a strong risk management system.
• Ensure data safety, comply with local data storage rules, and establish a dispute resolution mechanism.
• Non-bank PAs must also register with the Financial Intelligence Unit-India (FIU-IND) and comply with its reporting requirements.

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Rules for Cross-Border Payment Aggregators (PA-CB)

• Inward and outward transaction funds must be kept separate.
• PA-CBs can onboard foreign merchants but cannot buy or sell foreign currency except through authorized dealers.
• Maximum transaction value is ₹25 lakh for inward or outward payments.
• Outward transactions cannot use small prepaid payment instruments (PPIs).

Escrow Account Management

The RBI has laid strict rules for escrow accounts:

• Funds must be kept in an escrow account with a scheduled commercial bank, separate from the PA’s own funds.
• Settlement to merchants must generally happen by T+1 (T = transaction date).
• Only domestic escrow balances can earn interest; cross-border balances cannot.
• Escrow accounts cannot be used for cash-on-delivery payments.
• Merchant agreements must clearly disclose all charges, including MDR, setup fees, maintenance fees and others.

These guidelines aim to strengthen the regulatory framework, enhance transparency and protect both merchants and consumers in the growing digital payments ecosystem.

"An entity seeking authorisation to commence or carry on PA business shall have a minimum net-worth of Rs 15 crore at the time of tendering application for authorisation; and shall attain a minimum net-worth of Rs 25 crore by the end of the third financial year of grant of authorisation," it said.

The guidelines cover escrow accounts, fund management, cross border limits for PA-CBs and governance, requiring promoters to meet ‘fit and proper’ criteria. The RBI had issued draft directions in April 2024 and finalized the rules after consulting stakeholders.

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