Ecommerce Cos Might Have To Set Up Separate Entity For Their Payments Gateway

In a discussion paper published on September 17, The Reserve Bank Of India (RBI) proposed that ecommerce marketplaces acting as payment gateways and payment aggregators to other merchants might have to separate their marketplace business from payments vertical.

This move is suggested in order to ensure a better regulatory approach. Currently, multiple ecommerce majors have set up their own payment gateways including Flipkart’s PayZippy, Amazon Pay and Shopclues’ Reach.

“The primary business of these ecommerce marketplaces does not come within the regulatory ambit of RBI and in case of regulatory prescriptions for payment aggregators, they would end up being subjected to dual regulation. Hence, separation of these two activities would entail a better regulatory approach or process,” the apex regulatory body said in the paper. 

If finalised, ecommerce marketplaces will be given three months to comply with the regulations and create a separate entity for payments and marketplace verticals. 

Further, the payment intermediaries are proposed to maintain a minimum net worth of INR 100 Cr at all times. To comply with this requirement, the payment aggregator will be given one year after the issuance of final guidelines and the entities who are not able to comply with these regulations will be required to close up their payment aggregation in one year’s time.

Earlier in 2019, RBI’s Monetary Policy Statement for 2018-19 also indicated that the regulatory body would be reviewing the existing regulations around payment intermediaries.

Govt regulations around ecommerce companies have been constantly widening including new FDI guidelines, which had sought to enable a level playing field for online sellers and ecommerce marketplaces and introduction of an ecommerce regulator for customer redressal. 

Further, the government has also been considering an ecommerce policy for the past few months, since the DPIIT has released the draft ecommerce policy in February. 

According to a 2018  NITI Aayog report, India’s digital payments industry is estimated to grow to $1 Tn by 2023. The report also noted that the value of digital payments will likely jump from the current 10% to over 25% by 2023.

Multiple payment aggregators and digital wallets have contributed to the growth of digital payments in India. Some notable players include Razorpay, Instamojo, Paytm, and Google Pay among others. 

Also, The RBI  governor Shaktikanta Das has recently said that the central bank will come up with a regulatory framework of customer-protection measures tailor-made for digital transactions.

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