RBI’s new rules mandate cross-border payment aggregators to seek licence

The Reserve Bank of India (RBI) has issued a circular of rules on the regulation of payment aggregators dealing in the processing and settlement of small-value export and import-related payments.

All payment aggregators (PAs), which facilitate the processing of domestic transactions in online mode, are covered in this circular and others that have been issued in the past.

"Keeping in view the developments that have taken place in the area of cross-border payments, it has been decided to bring all entities facilitating cross-border payment transactions for import and export of goods and services under direct regulation of the RBI," the central bank says.

It adds that the entities, including authorised dealer banks, payment aggregators (PA) and PAs-CB (cross-border), involved in the processing or settlement of cross-border payment transactions for the import and export of goods and services, will comply with these instructions.

The PAs-CB entities facilitate cross-border payment transactions for the import and export of permissible goods and services in online mode. 

In terms of the requirement of authorisation, the RBI says the authorised dealer the category-I banks “do not require” separate approval from the RBI for undertaking PA-CB activity.

Non-banks, which provide PA-CB services as of the date of this circular, will apply to the RBI for authorisation by April 30, 2024. They will be allowed to continue such services till they receive communication from the RBI regarding the decision on their application. The authorisation can be sought under any of the three categories, including export only PA-CB, import only PA-CB, export and import PA-CB.

The entities, currently carrying out this activity, must follow the guidelines on governance, merchant onboarding, customer grievance redressal and dispute management framework, baseline technology recommendations, security, fraud prevention and risk management framework within three months, says the RBI. Non-adherence can lead to the application for authorisation being “refused”, says the central bank.

Non-bank payment aggregators – authorised as well as those whose applications for authorisation are pending with the RBI – will advise the Department of Payment and Settlement Systems (DPSS), RBI, Central Office (CO) in the next 60 days about their existing PA-CB activity and whether, or not, they would want to continue it. If they wish to continue, they must seek the RBI’s approval.

In future, any authorised PA, which wants to start PA-CB activity, will seek approval from DPSS, RBI, CO prior to start of such business. This will also be also applicable for any authorised non-bank PA-CB. “In other words, a single authorisation will be required by a non-bank to undertake PA and PA-CB activity.”

If an authorised PA-CB desires to change its activity, it will inform DPSS, RBI, CO atleast 60 days prior to the start of business in such new activity category and start it only after the RBI approval.

As a pre-requisite for seeking authorisation, all non-bank PA-CBs must register with the Financial Intelligence Unit-India (FIU-IND), says the apex bank.