Guwahati: The Reserve Bank of India (RBI) has granted Razorpay, Pine Labs, and American payments company Stripe payment aggregator (PA) and payment gateway (PG) licences in principle, according to a media report. The companies are the first to be granted such a licence. They must undergo an audit during the next six months for the ultimate licensing.

According to an ET article citing sources, the central bank will soon provide a complete list of the players who have been permitted to function as payment aggregators in the country. The RBI mandates that all PAs be authorised by the RBI, according to the most recent standards announced in March 2020. The rules require all payment gateways, including Stripe, BillDesk, Razorpay, and Cashfree, to obtain a licence in order to operate. The regulator instructed non-bank entities providing PA services to apply for authorization by June 30, 2021, which was eventually pushed back to September 30, 2021. BharatPe, Tata Group, PhonePe, Cred, Zomato, and Amazon were among those who filed for the license. In the absence of the licence, e-commerce and other players will have to either partner with a bank to aggregate payments on their behalf (which would increase expenses) or rely on a PA, which would result in greater business for these licensed firms.
Payments in the internet domain are enabled by a multitude of intermediaries such as payment gateways and payment aggregators, according to the RBI's Discussion Paper on Guidelines for Payment Gateways and Payment Aggregators. These intermediaries serve as a link between those who provide goods or services (merchants) and those who require them (customers). The involvement of such intermediaries is critical to a successful online experience.

Existing regulations in this area, albeit indirect, were issued by the Reserve Bank of India (RBI) in November 2009, requiring banks to keep a nodal account of intermediaries with allowed credits and debits, as well as the settlement cycle for the credit to merchants. This nodal account had to be in the form of an 'internal account' of the organisation. Payment Gateways and Payment Aggregators may additionally provide services such as settlement generation through the netting of monies received by merchants onboarded by them. These service providers play a role in the processing and completion of payment transactions by acting as a bridge between consumers on one end and merchants on the other. According to the discussion paper provided before the guidelines were issued, they could be hired by a bank, a merchant, or a biller (utility provider, telephone, etc.).

"The roles of payment gateways and payment aggregators in online transactions are critical." Entities may be a source of risk in such a technology and customer experience-focused organisation if they have insufficient governance processes that may damage consumer confidence and experience," it says.