Payment providers such as Razorpay, Pine Labs, Stripe, and 1Pay have received in-principle approval from the Reserve Bank of India (RBI) for payment aggregator licences.
What does it mean?
Getting the RBI’s nod for payment aggregator’s licence essentially means the entities will now be directly under the purview of the central bank in rendering payment services to merchants.
What are Payment aggregators?
- Payment aggregators are entities that enable e-commerce sites and merchants to accept various payment instruments from customers for completion of their payment obligations, without the need for merchants to create a separate payment integration system of their own.
- They allow merchants to connect with acquirers. In the process, they receive payments from customers, pool and transfer them on to the merchants after a time period.
RBI guidelines
- In a new set of guidelines issued in March 2020, RBI had mandated that all PAs shall be authorised by RBI.
- For this, the regulator instructed non-bank companies offering PA services to apply for authorisation by June 30, 2021, which was later pushed to September 30, 2021.
Payment aggregator and Payment gateway
- A payment aggregator provides payment services for merchants and e-commerce sites by accepting payment instruments from customers.
- As part of the process, they pool the funds received from customers and transfer them to merchants after a certain time.
- Payment gateways simply provide technology services to businesses for processing transactions. They do not have any involvement in handling of funds.
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