RBI to regulate payment aggregators, reduces licence capital requirements to Rs 15 crore

The Reserve Bank of India (RBI) on Tuesday said it will regulate activities of payment aggregators (PAs) as they play a key role in facilitating payments in the online space. The move is likely to provide a major relief for payments industry players like Billdesk, CCAvenue, Firstdata, Techprocess, Razorpay, Cashfree, and others.

"PAs are entities that facilitate e-commerce sites and merchants to accept various payment instruments from the customers for completion of their payment obligations without the need for merchants to create a separate payment integration system of their own," the RBI said in a statement. "Existing non-bank entities offering payment aggregation (PA) services shall apply for authorisation on or before June 30, 2021."

The central bank has also lowered the minimum capital requirements for payment aggregators to Rs 15 crore at the time of application for the licence from Rs 100 crore it had proposed earlier.

The apex bank said that PAs should achieve a net-worth of Rs 15 crore by March 31, 2021 and a net-worth of Rs 25 crore by the end of the third financial year, i.e., on or before March 31, 2023. The net-worth of Rs 25 crore shall be maintained at all times thereafter.

Net-worth will consist of paid-up equity capital, preference shares that are compulsorily convertible to equity, free reserves, balance in share premium account and capital reserves, book value of intangible assets and deferred revenue expenditure, if any.

As per RBI guidelines, compulsorily convertible preference shares can be either non-cumulative or cumulative, and they should be compulsorily convertible into equity shares and the shareholder agreements should specifically prohibit any withdrawal of this preference capital at any time.

Adding to it, entities having foreign direct investment (FDI) will be guided by the consolidated the foreign direct investment policy of the government and the relevant foreign exchange management regulations.

PAs will have to put in place a formal, publicly disclosed customer grievance redressal and dispute management framework, it added.

The RBI has also prescribed an indicative baseline technology-related recommendations for adoption by the PAs and Payment Gateways (PGs).

PGs are entities that provide technology infrastructure to route and facilitate the processing of an online payment transaction without any involvement in the handling of funds.

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