I.UPI Transaction Processor (TPAP):

A TPAP is an entity that provides UPI-compliant applications to end-users for facilitating UPI-based payment transactions. These applications can include mobile wallets, merchant apps, or any other platform that utilizes UPI for payments.

NPCI's Role:

The National Payments Corporation of India (NPCI), the governing body for retail payments and settlement systems in India, owns and operates the UPI platform. TPAPs leverage this infrastructure to enable UPI transactions.

TPAP Functionality:

TPAPs work in conjunction with payment service providers (PSPs) and banks to facilitate transactions. They are responsible for ensuring that their applications adhere to the security standards and compliance guidelines set by NPCI.  

Regulatory Requirement:

According to current regulations, payment service providers (PSPs) must obtain a TPAP license from NPCI to offer UPI services and facilitate merchant transactions through partner banks.

Popular TPAP Apps:

There are currently 22 NPCI-approved third-party UPI apps available for use in India. These include well-known names like Amazon Pay, Google Pay, Groww, Jupiter Money, Mobikwik, Phonepe, Samsung Pay, TataNeu, and Whatsapp.

 

II. Payment Aggregator:

A payment aggregator is a third-party service that facilitates online payments between customers and businesses. They act as intermediaries, enabling businesses to accept a variety of payment methods, including debit cards, credit cards, cardless EMIs, UPI, bank transfers, e-wallets, and e-mandates. Additionally, payment aggregators can disburse payments to stakeholders such as partners, employees, suppliers, and authorities.

Regulatory Requirement:

In India, payment aggregators must obtain an aggregator license from the Reserve Bank of India (RBI) to operate. This license authorizes them to acquire merchants and provide the necessary infrastructure for accepting and disbursing digital payments.

Benefits for Businesses:

By using a payment aggregator, businesses can avoid the complexities of partnering with numerous banks and NBFCs to accept different payment methods. Payment aggregators provide a unified platform that integrates seamlessly with various payment options. Furthermore, they handle the technological aspects of designing and maintaining a secure checkout process.

 

III. UPI TPAP License vs. Payment Aggregator License: Key differences

Feature

UPI TPAP License

Payment Aggregator License

Role

Intermediary between banks and payment service providers (PSPs)

Gateway between merchants and payment service providers (PSPs)

Focus

Processing UPI transactions, ensuring seamless communication and data exchange between banks and PSPs

Facilitating payments from multiple sources, including UPI, credit cards, debit cards, and net banking

Eligibility

Banks, payment service providers, and technology companies

Companies that wish to provide payment gateway services to merchants

Key Responsibilities

Processing UPI transactions, managing customer onboarding and authentication, ensuring compliance with regulatory requirements, handling customer support and dispute resolution

Onboarding and managing merchants, processing payments from multiple sources, reconciling transactions and settling funds with merchants, ensuring compliance with regulatory requirements

Regulatory Oversight

Primarily regulated by the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI)

Regulated by the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI)

Examples

NPCI, HDFC Bank, ICICI Bank, Axis Bank

Razorpay, Paytm, Stripe, PhonePe

Source

Reserve Bank of India (RBI) guidelines on UPI and payment aggregators, National Payments Corporation of India (NPCI) website

Reserve Bank of India (RBI) guidelines on UPI and payment aggregators, National Payments Corporation of India (NPCI) website