RBI Proposes Draft Rules To Regulate PoS For Online Payment Aggregators

Months after releasing guidelines for online payment aggregators like Razorpay and Cashfree, the Reserve Bank of India (RBI) has issued draft rules to regulate point-of-sale payment service providers (PA-P).

Following this, companies like Innoviti Payments, Pine Labs, and MSwipe will be brought under regulatory cover.

As per the draft rules, companies offering this service must apply for authorisation from the RBI by May 31, 2025. In case they fail to get authorisation, they will have to cease these services.

Payment aggregators must inform the regulator about their plan to seek authorisation within 60 days of the formal guidelines’ issuance, as per RBI. Banks are instructed to shut down non-bank payment service providers by October 31, 2025, unless they show proof of applying to the the central bank for authorisation. 

The central bank on Tuesday (April 16) asked online payment firms to monitor the transactions-related activities of merchants on their platforms and ensure compliance with its new guidelines, tightening scrutiny of the sector. 

The RBI introduced new guidelines, establishing different levels of due diligence based on merchant size and requiring payment aggregators to maintain agent details. These guidelines will take effect in three months. 

The regulator has proposed stricter customer due diligence measures for payment aggregators to ensure that only eligible merchants access digital payment services. Besides, all payment aggregators must join the financial intelligence unit (FIU) under the finance ministry to report any suspicious transactions. These guidelines apply to both PA-P and online payment aggregators (PA-O). The RBI stated that these instructions on KYC will be effective three months from the date of the circular’s issuance.

On existing merchants, it wants PAs to adhere to KYC rules by September 2025.

To streamline operations for payment players, the central bank has proposed categorising merchants into small and medium segments. According to the regulator, small merchants are physical merchants with an annual turnover of less than INR 5 Lakh, while medium merchants have turnovers ranging from INR 5 Lakh to INR 40 Lakh per annum.

This comes a month after digital payments solutions company Innoviti became the latest player to secure an online payment aggregator (PA) licence from the RBI. Innoviti operates PA ‘Innoviti Link’, which currently serves 2,500 online merchants.

In the same month, Infibeam Avenues also secured final authorisation from the central bank to operate as a payment aggregator via its payment gateway brand CCAvenue. 

In February, Amazon’s fintech arm Amazon Pay also received PA authorisation. Meanwhile, Policybazaar’s parent PB Fintech is also eyeing a foray into the payment aggregation business with a new subsidiary PB Pay.