RBI issues draft norms for offline payment aggregators, moots ₹15-cr net worth

Reserve Bank of India has issued two draft directions on regulation of Payment Aggregators (PA), pertaining to physical Point-of-Sale (PoS) activities of these players, net worth and licensing requirements.

The second circular covers revisions and updates to KYC and due diligence of merchants, operations in escrow accounts, etc, and are intended to further strengthen the payment ecosystem, the central bank said.

RBI had, in September 2022, announced regulation of offline PAs who handle proximity / face-to-face payments. The regulator has sought comments and feedback on the draft circular May 31, 2024.

The payments ecosystem in India includes online PAs (PA - O) and those which facilitate face-to-face or proximity payment transactions ((PA - P). “An authorised non-bank PA-O (or PA-P) which wants to commence physical (or online) PA activity (as the case may be), shall seek approval from Department of Payment and Settlement Systems (DPSS), RBI, CO prior to commencement of such business,” RBI said.

Compliance deadline

The draft guidelines mandate PA-P banks to comply with the final norms within three months of issue whereas non-bank entities providing PA-P services will need to inform RBI about their intention to seek authorisation within 60 days of the circular being issued and submit an application by May 2025.

Non-bank PA-Os too will also need to seek RBI’s approval within 60 days if they wish to continue their PA-P operations.

Non-banks providing PA-P services will need a minimum net worth of ₹15 crore at the time of application and a minimum net worth of ₹25 crore by March 31, 2028. New non-bank PA-P will need minimum net worth of ₹15 crore at the time application and will be required to grow it to ₹25 crore by end of the third financial year of grant of authorisation.

“Existing non-bank PA-P which are not able to comply with the net worth requirement or do not apply for authorisation within the stipulated time frame, shall wind-up PA-P activity by July 31, 2025,” RBI said.

In the second circular, RBI said that non-bank PAs shall be permitted to engage agents to assist their merchants for onboarding, subject to a Board approved policy and proper due diligence of the agents.

It also said that for face-to-face / proximity payment transactions done using cards, no entity in the card transaction / payment chain, other than the card issuers or card networks, shall store the card-on-file data from August 1, 2025.

“Any such data stored previously shall be purged. For transaction tracking and / or reconciliation purposes, entities can store limited data – last four digits of card number and card issuer’s name – in compliance with the applicable standards,” it said.

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