RBI grants in-principle approval to 32 entities for payment aggregator licence

Online payment aggregators are entities that on-board digital merchants and accept payments on their behalf after getting a licence by the banking regulator.

This is the first time RBI has released a list with “current application status” for all payment aggregators, saying it is in the interest of “greater transparency.” The list, the banking regulator said, would be updated every fortnight. The current status is as of February 15 and scrutiny of applications is still underway.

RBI said it is still considering 18 applications, including from PhonePe and BhartiPay Services.

Separately, RBI also returned four applications, including those of Axis Bank-led FreeCharge, Paytm Payments and PayU Payments. While Paytm’s application was returned on November 25 last year, the request by PayU was sent back on January 10 this year.

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FreeCharge’s application was returned on February 10.

“All stakeholders are advised to transact with only those existing payment aggregators that have been granted in-principle authorisation, or whose application is currently under process,” the central bank said in a statement.

Paytm to reapply

Entities that have had their applications returned can apply to RBI within 120 days from the date of the central bank’s decision. Until then, they cannot onboard new merchants.

Those that have received an in-principle nod from RBI to operate as payment aggregators also include Infibeam Avenues, Innoviti Payment Solutions, Lyra Network, NSDL Database Management, Open Financial Technologies, Pine Labs and Razorpay Software.

The payment aggregator framework, introduced formally in March 2020, mandates that only firms approved by RBI acquire and offer payment services to merchants, coming under its direct purview.

According to RBI rules, the eligibility criteria for a company applying for an aggregator authorisation is a minimum net worth of Rs 15 crore in the first year of application, subsequently climbing up to Rs 25 crore by the second year. It also must fulfil the ‘fit and proper’ criteria and be compliant with global payment security standards.

On Tuesday, RBI also came out with a set of clarifications on its guidelines for digital lending and said payment aggregators can function as loan service providers by complying with digital lending norms.

In its response, Paytm said, “We are in the process of reapplying (for the licence), as updated in our recent earnings release. As shared earlier, this does not have any material impact on our online business and revenues.”

“For the offline business, One97 Communication can continue to onboard new merchants and offer them payment services including all-in-one QR, soundbox and card machines,” it added.