IRCTC To Approach RBI For Payment Aggregator License

The Indian Railway Catering and Tourism Corporation (IRCTC) is set to enter the payment aggregator space and the body now plans to approach RBI for an aggregator license. 

According to the BusinessLine report, IRCTC, which is a railway public sector undertaking (of Indian Railways), has lately got approval from the Registrar of Companies, NCT Delhi and Haryana and further being asked to change the ‘main objects clause’ in its memorandum of association (MoA) with a new clause in order to perform as a payment aggregator.

Following this, IRCTC will be all prepared to foray into the Indian digital payment sector and thus, approaching RBI to get a payment aggregator license.

In order to get the RBI’s approval, non-bank payment aggregators including IRCTC will have to comply with the Payment and Settlement System Act 2007 and also frame an MoA stating their interest in becoming a payment aggregator. The entire process, however, including the application and RBI’s approval will take some time.

It is prudent to note here that IRCTC is currently using its payment gateway called I-PAY on its website and app. In essence, I-PAY enables digital transactions for reserving tickets for buses, air travel and railways.

With the help of I-PAY, IRCTC seems to have an established user base. After getting the RBI’s nod, IRCTC can further expand its reach by partnering with merchants.  

As per its annual general meeting (AGM), IRCTC will offer, market, build, design and carry out business operations of all kinds of electronic and virtual payment systems services, payment systems, prepaid and postpaid payment instruments, and payment gateway and aggregator services. 

In addition, it will also act as a bill payment gateway thereby, offering bill payment services under the guidelines of Bharat Bill Payment System.

The development has come at a time when various startups and business entities have shown interest in becoming a payment aggregator. At present, more than 180 fintech startups have applied for the said license.

Besides, a host of fintech startups including NTT, Razorpay, Pine Labs and Mswipe have got the payment aggregator license in the last few months.

As per the RBI, fintech startups, who seek to apply for payment aggregator license, need to have a net worth of INR 15 Cr in the financial year 2022. After fulfilling this requirement, the said fintech startups can apply for the license by the end of this month (September 30th). 

In essence, a payment aggregator is a third-party payment company that enables digital payments on the behalf of merchants. Once a payment aggregator integrates with merchants’ websites, it is able to offer a host of online payment services such as bank transfers, credit and debit cards, among others.

Back in 2020, the RBI initiated the payment aggregator framework. With this, the central bank aimed to regulate the digital payment sector thus, new entrants to comply with the Payment and Settlement Systems Act (2007) and also acquire a license.