Payment aggregators face tighter rules as RBI consolidates guidelines

By Vriti Gothi

The Reserve Bank of India (RBI) has released its long-awaited Master Direction on Payment Aggregators (PAs), bringing together all previous circulars and guidelines into a single, comprehensive framework. The move is being seen as a defining moment in India’s digital payments evolution, aimed at creating greater clarity, consistency, and security in a market that has grown exponentially in recent years.

Until now, the regulatory landscape for payment aggregators has been spread across multiple advisories and circulars, often leading to uncertainty for both banks and non-bank entities operating in the space. By consolidating these into one unified directive, the RBI has addressed a long-standing demand from the industry for a streamlined and predictable compliance environment. The framework not only strengthens licensing and operational requirements but also introduces more robust expectations around risk management, merchant governance, and consumer protection.

For non-bank payment aggregators, the directive establishes a clearer rulebook at a time when the sector has become indispensable to the country’s eCommerce and digital payments ecosystem. While the compliance requirements are expected to increase, particularly in terms of capital adequacy, governance structures, and risk oversight, the long-term benefits of regulatory clarity may outweigh the short-term costs. Banks operating as aggregators will also need to align with the updated standards, ensuring that merchant onboarding, transaction monitoring, and grievance redressal processes are tightened across the board.

Industry experts believe that the impact of the Master Direction will extend well beyond regulatory housekeeping. By strengthening fraud prevention mechanisms, mandating scalable dispute resolution systems, and tightening merchant due diligence, the framework is likely to inspire greater trust among merchants and consumers alike. This comes at a time when digital transaction volumes continue to surge, and the industry faces mounting challenges in balancing speed and scale with security and compliance.

Savita Vashisht, Co-Founder & Executive Director, NPST, said, “The Reserve Bank of India’s (RBI) Master Direction for Payment Aggregators is a significant advancement for the country’s digital payments landscape. By creating a clear, unified, and stronger regulatory framework, the directive brings much-needed clarity and confidence to the industry.This strategic move not only enhances protections against fraud and improves dispute resolution and merchant governance but also paves the way for greater innovation, inclusion, and sustained growth. For Payment Aggregators, the directive presents a prime opportunity to build more secure, seamless, and future-proof payment solutions. The true test now lies in the execution. The focus must now shift to integrating real-time risk intelligence, strengthening merchant due diligence, and establishing scalable online dispute resolution systems. The future of India’s digital payments ecosystem will ultimately be defined by the resilience of these systems, not just by the sheer volume of transactions they process.”

The timing of the new directive is critical. With India’s digital economy poised for further expansion, payment aggregators are under pressure to evolve from being mere enablers of transactions to becoming custodians of consumer trust and systemic stability. Analysts expect that the framework could accelerate consolidation within the industry, with only well-capitalized and technologically adept players likely to thrive under the stricter compliance regime. At the same time, it may stimulate innovation in areas such as fraud analytics, AI-driven risk monitoring, and scalable dispute resolution platforms.