Payment Aggregator License in India: Eligibility, RBI Rules

 What is a Payment Aggregator?

A payment aggregator is a service provider that enables businesses to accept digital payments from customers without the need to directly connect with multiple banks or payment networks. In simple words, it functions as a single platform that integrates various payment methods and offers them to merchants through one unified system.

For example, if you run an online fashion brand, a payment aggregator allows your customers to pay using UPI, debit cards, credit cards, net banking, or digital wallets through a single integration. The aggregator manages the entire backend process, including payment processing, technical integration, settlement of funds, and compliance with regulatory requirements. This allows businesses to focus on growth rather than operational complexities.

In India, payment aggregators are required to obtain approval from the Reserve Bank of India (RBI). This regulatory oversight ensures that payment services are secure, reliable, and compliant with financial laws.

Categories of Payment Aggregators

Payment aggregators are classified based on the nature of transactions they facilitate:

i. Payment Aggregator – Physical (PA-P)

This category includes aggregators that process transactions where both the payment instrument and the acceptance device are physically present at the point of sale. Typical examples include card swipes or tap-and-pay transactions at retail outlets.

ii. Payment Aggregator – Cross Border (PA-CB)

These aggregators handle cross-border payments for current account transactions conducted through e-commerce platforms, provided such transactions are permitted under FEMA regulations.

PA-CB is further divided into:

• PA-CB (Inward): Facilitates receipt of payments from foreign customers.
• PA-CB (Outward): Facilitates payments made by Indian customers to overseas merchants.

Important Clarifications:

1. Non-bank entities authorised as AD Category-II that facilitate permissible current account transactions (other than purchase or sale of goods or services) are not considered PA-CBs.
2. Card transactions where foreign exchange settlement is handled by card networks and the aggregator receives funds in Indian currency do not fall under PA-CB activities.

iii. Payment Aggregator – Online (PA-O)

This category includes aggregators that facilitate remote transactions where the payment instrument and acceptance device are not physically present together, such as online shopping or mobile app payments.

How Does a Payment Aggregator Operate?

The payment process through an aggregator is simple and efficient:

1. A customer selects a product or service on the merchant’s platform and chooses a payment option such as UPI or card.
2. The payment aggregator securely processes the transaction using its technology infrastructure.
3. The transaction is routed to the relevant bank or payment network for authorization.
4. Once approved, the aggregator reconciles the payment and transfers the funds to the merchant’s bank account in Indian Rupees (₹).

This system removes the need for merchants to enter into separate agreements with multiple banks or payment networks. Everything is managed through a single service provider.

For instance, a direct-to-consumer skincare brand selling across different regions can rely on one payment aggregator instead of maintaining multiple payment integrations. This significantly reduces operational effort, saves time, and ensures compliance with RBI regulations.

Types of Payment Aggregators in India

Based on their operational structure, payment aggregators in India can be broadly divided into two types:

Bank-Based Payment Aggregators

These aggregators are operated by banks and typically follow a traditional service model. They are commonly used by large enterprises due to their reliability. However, the onboarding process is often lengthy, costly, and technically complex, making them less suitable for startups and small businesses.

Third-Party Payment Aggregators

Third-party aggregators are widely preferred due to their flexibility, innovation, and ease of use. They offer faster onboarding, cost-effective solutions, and a wide range of payment options. Their scalable and merchant-friendly platforms make them ideal for growing businesses.

Importance of a Payment Aggregator License

The RBI requires all payment aggregators to obtain a valid license to operate legally in India. This authorization allows them to onboard merchants, collect payments on their behalf, and securely settle funds.

A payment aggregator license is important for the following reasons:

• Trust: Merchants can confidently partner with licensed and regulated entities.
• Regulatory Compliance: Continuous RBI supervision ensures adherence to financial and operational standards.
• Fraud Protection: Customer data and merchant funds remain protected within a regulated framework.

Key Features of Payment Aggregators

Payment aggregators are essential to the digital payments ecosystem and are widely used across sectors such as e-commerce, fintech, retail, and services. Their key features include:

Secure Payment Systems

Aggregators provide robust security through encryption, tokenization, and advanced fraud-detection tools, ensuring the safety of customer and transaction data.

Multiple Payment and Settlement Modes

They support a wide range of payment options, including cards, UPI, net banking, wallets, and EMI facilities, offering convenience to customers and flexibility to merchants.

Easy Merchant Onboarding

Merchant registration is simple and quick, usually requiring basic documents such as PAN, address proof, and bank details. Compared to traditional banking arrangements, the onboarding process is significantly faster.

Transaction Monitoring and Fraud Control

Every transaction generates a digital record, enabling real-time tracking, detection of suspicious activity, and effective fraud management through alerts and analytics.

Customer-Oriented Benefits

Many aggregators offer incentives such as cashback, discounts, and EMI options, which enhance customer satisfaction, encourage repeat purchases, and help merchants increase sales.

Authorisation for Payment Aggregator (PA) Business

1. Banks are not required to obtain separate authorisation from the Reserve Bank of India (RBI) to undertake Payment Aggregator (PA) activities.
2. Any non-bank entity intending to operate as a Payment Aggregator must obtain authorisation from the RBI by submitting an application through RBI’s online portal PRAVAAH.

If the applicant entity is already regulated by any other financial sector regulator, the application must be accompanied by a No Objection Certificate (NOC) issued by such regulator. The application on PRAVAAH must be filed within 45 days from the date of receipt of the NOC.

1. A non-bank Payment Aggregator must be incorporated in India as a company under the Companies Act, 2013. The Memorandum of Association (MoA) of the applicant company should expressly include the proposed activity of operating as a Payment Aggregator.
2. With effect from the date of issuance of these Directions, the following shall apply:

 A Payment Aggregator already holding a Certificate of Authorisation (CoA) issued by the RBI:

1. if presently carrying on business as a PA-P, shall inform the RBI accordingly, upon which a revised CoA shall be issued; or
2.  if intending to commence operations under any other PA category, shall intimate the RBI at least 30 days prior to starting such additional business.

ii. Any entity whose application for grant of CoA for PA-O or PA-CB is under consideration by the RBI shall inform the RBI, through the PRAVAAH portal, about any existing PA-P activity being carried on by it, if applicable, on or before December 31, 2025.

iii. An entity engaged exclusively in PA-P activities must apply for authorisation in accordance with the procedure prescribed above by December 31, 2025.

Entities failing to submit an application within the prescribed timeline shall immediately inform their banker(s) and must wind up their PA business by February 28, 2026.

1. Applications that do not meet the minimum capital requirements, or are incomplete, or are not submitted in the prescribed manner, shall be returned by the RBI.

Capital Requirements

1. An entity applying for authorisation to commence or continue PA business must have: a minimum net worth of ₹15 crore at the time of submission of the application; and a minimum net worth of ₹25 crore by the end of the third financial year from the date of grant of authorisation.
2. The applicable minimum net worth must be maintained by the Payment Aggregator on a continuous basis.
3. For the purpose of these Directions, the computation of net worth shall be guided by RBI Circular DPSS.CO.AD. No.1344/02.27.005/2014-15 dated January 16, 2015, as amended from time to time.

In addition to the components specified in the said circular, preference shares that are compulsorily convertible into equity shares shall also be included in the calculation of net worth. Such preference shares may be cumulative or non-cumulative but must be compulsorily convertible into equity, and the relevant shareholder agreements must clearly prohibit withdrawal of this capital at any time.

Further, if Deferred Tax Assets (DTA) are included in any component, the same shall be deducted while computing the final net worth.

1. Entities having Foreign Direct Investment (FDI) shall comply with the Consolidated FDI Policy issued by the Government of India and the applicable Foreign Exchange Management regulations.
2. An entity seeking PA authorisation must submit a Net-Worth Certificate issued by its statutory auditor confirming compliance with the applicable net-worth requirement along with the application on PRAVAAH.

In the case of a newly incorporated non-bank entity that does not yet have audited financial statements, a Net-Worth Certificate from the statutory auditor along with a provisional balance sheet as on a recent date shall be submitted.

Step-by-Step Guide to Register and Apply through PRAVAAH for Payment Aggregator Authorisation

Step 1: Access the PRAVAAH Portal

Visit the Reserve Bank of India’s PRAVAAH online portal, which is the designated platform for submitting regulatory applications to the RBI. Ensure that you have a stable internet connection and access to the official email ID and contact details of the applicant entity.

Step 2: Create a User Account

Register on the portal by creating a user account in the name of the applicant company. While registering, you will be required to provide basic details such as the entity’s name, registered address, authorised signatory details, email ID, and mobile number. After successful registration, login credentials will be generated for future access.

Step 3: Log in and Select the Appropriate Application Type

Once logged in, navigate to the application section of the portal and select the category related to Payment Aggregator (PA) authorisation. Carefully choose the correct PA category applicable to your business model to avoid delays or rejection.

Step 4: Fill in the Application Form

Complete the online application form by entering accurate and up-to-date information regarding the entity, its promoters, directors, shareholding pattern, business model, and operational framework. Ensure that the information provided is consistent with the company’s incorporation and statutory records.

Step 5: Upload Required Documents

Upload all mandatory documents in the prescribed format, including:

1. Net-Worth Certificate issued by the statutory auditor
2. Memorandum of Association (MoA)
3. Articles of Association (AoA)
4. No Objection Certificate (NOC) from the concerned regulator, if applicable
5. (Any other Required Additional document)

Step 6: Review the Application

Before final submission, carefully review the entire application to ensure there are no errors, omissions, or inconsistencies. Any incorrect or incomplete information may lead to the application being returned by the RBI.

Step 7: Submit the Application Online

After completing the form and uploading all documents, submit the application electronically through the PRAVAAH portal. Upon submission, an acknowledgment or reference number will be generated for future correspondence.

Step 8: Track Application Status

Use the reference number to regularly monitor the status of the application on the PRAVAAH portal. The RBI may seek clarifications or additional information during the review process, which must be responded to promptly through the portal.

Step 9: Respond to RBI Queries (If Any)

If the RBI raises any queries or requests further documents, respond within the stipulated time through PRAVAAH to avoid delays in processing the application.

Benefits of Payment Aggregators

Payment aggregators offer several benefits that make them an efficient solution for businesses of all sizes:

Quick Market Access

Merchants can begin accepting payments quickly without engaging with multiple banks. This significantly reduces setup time and administrative effort.

Strong Security and Regulatory Support

By relying on an RBI-regulated aggregator, merchants benefit from robust security systems and regulatory compliance without managing these requirements independently.

Cost-Effective Operations

Payment aggregators are particularly beneficial for startups and MSMEs, as their pricing models are generally more affordable than maintaining separate bank integrations.

Wide Range of Payment Options

With multiple payment methods available on a single platform, customers enjoy greater flexibility, leading to improved conversion rates for merchants.

Faster and Organized Settlements

Aggregators consolidate transactions and settle funds within predefined timelines, reducing reconciliation issues and ensuring predictable cash flow.

Difference Between Payment Aggregator and Payment Gateway

Although both are integral to digital payments, payment aggregators and payment gateways serve distinct roles:

Aspect	Payment Aggregator	Payment Gateway
Core Function	Acts as an intermediary between merchants and acquiring banks	Processes and authorizes transactions
Merchant Account	Provides sub-merchant accounts	Requires merchant’s own bank account
Integration	Single, unified integration	API-based integration with merchant systems
Fund Settlement	Collects, pools, and settles funds	Facilitates authorization and real-time processing
Additional Services	Fraud management, analytics, reporting	Transaction processing, tokenization, recurring payments

 

Conclusion:

Payment Aggregators have become a critical pillar of India’s digital payment ecosystem by simplifying how businesses accept and manage online and offline payments. By offering a single, secure platform that supports multiple payment modes, they reduce operational complexity for merchants while ensuring regulatory compliance under the oversight of the Reserve Bank of India (RBI).

With clearly defined categories, structured authorisation requirements, and strict capital norms, the RBI framework promotes trust, financial stability, and consumer protection. The introduction of the PRAVAAH portal has further streamlined the authorisation process, making compliance more transparent and efficient.

Overall, Payment Aggregators enable faster market access, enhanced security, and cost-effective payment solutions, especially for startups, MSMEs, and growing digital businesses, while maintaining the integrity and reliability of India’s payment systems.