• Source:JND
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The Reserve Bank of India on Wednesday introduced a draft set of guidelines aimed at boosting the payments ecosystem by strengthening rules governing payment aggregators. The RBI stated that in light of the growing number of digital transactions and the significant role played by PAs in this field, it is proposed to amend the existing instructions on PAs, covering, among other things, KYC and due diligence of merchants, as well as operations in escrow accounts, to strengthen the payments ecosystem.

The draft also addresses physical activities at the points of sale of payment aggregators (PAs). The Indian payments ecosystem consists of PAs and online PAs, which facilitate face-to-face or proximity payment transactions.

Concerning KYC and due diligence, the draft states that payment aggregators must conduct due diligence on merchants covered by them through Customer Due Diligence (CDD), as prescribed in the Master Direction on Know Your Customer (MD-KYC), 2016.
The draft states that PAs will need to ensure that the marketplaces incorporated by them do not collect or settle funds for services that are not offered through their platforms, on which the RBI has invited comments until May 31st, 2024.

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About face-to-face/proximity payment transactions carried out using cards on or after August 1st, 2025, the draft states that no entity in the card transaction/payment chain, except for card issuers and/or payment networks, will be allowed to store card-on-file data (COF). The draft states that all data already stored will be deleted.

The draft further states that non-banking entities providing PA-P services should have minimum net assets of Rs 15 crores at the time of applying for authorization to the RBI and minimum net assets of Rs 25 crores as of March 31st, 2028. Thereafter, a net worth of Rs 25 crores will be maintained at all times.

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