RBI Gives Payment Aggregators Another Window To Apply For Licence

The Reserve Bank of India (RBI) has offered a second chance to payment aggregators (PAs)  whose applications were rejected to apply for a licence again.

“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.

As per the RBI directive, PAs with a net worth of INR 15 Cr as of March 31, 2022, can apply by September 30, 2022. 

Moreover, the PAs whose applications had been returned earlier for non-compliance with the eligibility criteria, will be allowed to operate until they receive communication from RBI regarding their application.

“Though they have the option to apply afresh on meeting the prescribed criteria, ceasing operations may lead to disruption in payment systems. It is also possible that some PAs had not applied to RBI due to non-fulfillment of eligibility criteria,”

However, the timeline of March 31, 2023 for achieving net worth of INR 25 Cr remains the same,  the RBI stated.

In 2020, RBI introduced a payment aggregator framework to bring all PAs as regulated entities under the Payment and Settlement Systems Act (2007). Under the guidelines, the PAs were mandated to obtain a licence in order to acquire merchants and to deploy digital payments solutions.

The PAs who would receive the licence will come under the direct purview of the central bank. Although the industry raised alarm when the framework was introduced, many of the industry experts now believe that the payment aggregator framework would lead to a more standardised and regulated payments ecosystem.

Earlier this month, payments startups including Razorpay, Pine Labs, Innoviti among others received in-principle approvals from the RBI for a payment aggregator licence.