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Fully licensed payment aggregators (PAs) can now branch out faster into new segments such as cross-border (CB) payments, with the Reserve Bank of India’s (RBI’s) latest guidelines streamlining approvals and fast-tracking market entry.
Under the new framework, a fully licensed PA can begin operations in other PA categories by simply notifying the RBI 30 days in advance — a sharp shift from the earlier regime that required nearly a year for separate approvals in areas such as CB payments, often delaying revenue growth and expansion.
Two founders of fully licensed PAs told Business Standard that the move will accelerate their go-to-market plans in lucrative segments like CB payments.
“Most financial technology companies start with the PA licence and later expand to PA-CB. The requirements in the PA-CB application are at least 80 per cent similar to a regular PA licence,” said a founder of a PA startup.
The person added that since most fully licensed PAs already meet the RBI’s norms for domestic payments, they can move more quickly into other regulated business lines, as their core compliance systems are already in place.
The RBI’s latest guidelines specify that a PA must have a Certificate of Authorisation (CoA).
“A PA having a CoA issued by the RBI and desirous of commencing business in another PA category shall intimate the RBI at least 30 days prior to commencing the new business,” the norms read.
At present, there are 56 fully licensed online PAs in the country and six PA-CBs with full RBI approval.
A PA enables the aggregation of payments from customers to merchants through one or multiple payment channels, facilitated by the merchant’s physical or virtual interface for transactions. The PA then settles the collected funds to such merchants.
PA-CBs are entities that facilitate CB payment transactions for the import and export of permissible goods and services online, according to the RBI’s guidelines.
The relaxation in compliance norms is expected to bring more players under the PA-CB framework at a much faster pace than before.
“Many players will now just have to notify 30 days in advance as they enter CB. But new licences come with responsibility — one has to demonstrate that they’re actually doing business with it,” a second founder said.
That said, players will notify the RBI of their PA-CB plans only when they genuinely intend to enter a new payment business.
Founders added that they remain subject to RBI audits and cannot simply hold a licence without conducting business.
“The relaxed compliance norms come with added responsibility. Allowing multiple licensed players to enter new business lines based only on prior notification could pose risks to the broader ecosystem,” the first founder said.
At present, the relatively small number of licensed players in the CB payments space leads to higher margins, stoking interest in offering such services.
Obtaining a PA-CB licence requires compliance with stringent regulations, including the Foreign Exchange Management Act — a requirement not imposed on domestic online PAs, Business Standard reported last year.
