RBI plans to extend its online payment guidelines to offline players

By Puja Sharma

Since March 2020, online payment processors have been subject to RBI regulations, which mandate that only banks approved by the RBI are allowed to acquire and offer payment services to merchants.

The Reserve Bank of India (RBI) announced that its regulations for online payment aggregators will be extended to offline ones as well.

A payment aggregator that handles proximity or face-to-face transactions is called an offline payment aggregator. Since March 2020, online payment processors have been subject to RBI regulations, which mandate that only banks approved by the RBI are allowed to acquire and offer payment services to merchants. In a statement, RBI Governor Shaktikanta Das said, “This measure is expected to create regulatory synergy and convergence on data standards.”

Vishwas Patel, Chairman, Payments Council of India (PCI) and ED, Infibeam Avenues on RBI’s proposal to extend online payment aggregator norms to offline players: “It is a good step, and we welcome this. Undoubtedly, RBI wants to see that the Indian consumers are protected, payment systems are secured and all are regulated through single, standard regulation. Hence, almost all ecosystem players in all sectors or spaces, wherever there is a money transaction involved (for payments) and which were to date out of RBI’s ambit, are being proactively brought under a single regulation.

As the Indian economy turns more towards digitalisation, going ahead, the lines between customers using payment aggregators for online payments and customers using payment systems for physical, offline payments for in-shop transactions, will blur, and in some cases, it has already blurred to a greater extent. I think it would be a good idea to have a single regulation/licensing for all players for the same,” said Patel.

E-commerce sites and merchants use payment aggregators to accept various payment methods from customers. Providing merchants with payment gateways is what they do. According to the central bank’s 2020 guidelines, PAs should periodically update the list of merchants acquired by them to the bank where they have an escrow account.

“The role of Payment Aggregators (PA) in the payment ecosystem is paramount. So, to ensure that all consumers are protected, the payment systems need to be secure and controlled through a single, standard regulation. However, until now, the current regulations applied to online PAs only. RBI’s recent guideline to bring offline aggregators under the ambit of regulations is a much-needed, welcome move by the regulator.” said Anand Kumar Bajaj, Founder, MD & CEO, PayNearby, the digital banking platform.

This measure will bring uniformity to processes and create more transparency in transactions which will add discipline and streamline compliance across the payments landscape, ensuring ample security and data protection. As our country gradually inches towards digitalisation, all this will contribute to creating better customer journeys in the future by offering a consistent and secure digital payment experience – both online and offline.