Regulation of Payment Aggregators and Payment Gateways

Nowadays, we are using third-party apps for online transactions, which are easy to use and handle anywhere. Do you know these apps are working on some rules and regulations of the RBI? 

Here we will discuss some points related to the Regulation Of Payment Aggregators And Payment Gateways. These are the points. 

Can clarify the concept and regulations for payments Aggregators And Payment Gateway. Payment gateways are a method that can help merchants initiate eCommerce, in-app, and in the case of deal payments for eCommerce, etc., payment methods. So we will discuss these points in detail to know more rules of payments Aggregators And Payment Gateway.

Regulation Of Payment Aggregators And Payment Gateways

Defining PAs and PGs

Payment Aggregators are entities that facilitate e-commerce sites and merchants to accept various payment methods from the customers for completion of their payment obligations without the need for merchants to create a separate payment integration system of their own. PAs facilitate merchants to connect with acquirers. They receive payments from customers, pool, and transfer them to the merchants after some time.

Payment Gateways are entities that provide technology infrastructure to route and facilitate the processing of an online payment transaction without any involvement in handling funds.

Authorisation Requirements

A standard theory of corporate governance in economic organisations, “fit and proper criteria require particular requirements for evaluating managers, directors and office bearers to efficiently meet their duties while assuring their integrity and suitability for the post. With the adoption of “fit and proper criteria, the e- payment infrastructure will now be reliable to the regulators and customers for its governance and decision-making.

The Director of the PA company shall be supposed to be a “fit and proper” person if

Such a person has a record of fairness and integrity, including but not limited to:

financial integrity, good reputation, character, and honesty.

Condemned by a court for any infraction implicating severe turpitude, financial infraction, or any offence under the laws administered by the RBI.

Settlement and Escrow Account Management

For the escrow account, the operations of PAs are deemed to be “designated payment systems” under the Payment and Settlement Systems Act (PSS Act) after the entity obtains authorisation from RBI.

The amount due to the merchant will be reckoned only after the settlement and credited to the escrow account. There is no need to pre-fund the account for this purpose.

If there’s a need to shift one account from one bank to another, the similar shall be induced in a time-bound way without excessively influencing the payment progression to merchants. Migration shall be completed in the minimum possible time with prior intimation to RBI.

Compliances

Announced insolvent and not discharged Payment Aggregation retains an account-based connection with the merchant. They should follow the KYC guidelines of the Department of Regulation. 

For merchant onboarding, the PA can have a Board approved policy. There would not be a requirement to carry out the entire process of KYC in cases where the merchant already has a bank account used for transaction settlement purposes.

Suppose OPGSP is also an entity functioning as PG or PA under the guidelines stipulated by DPSS for undertaking any domestic leg of import/export transaction. In that case, it has to be ensured that the timelines and other guidelines, including those relating to authorised modes of collection, i.e., debit card, credit card, and internet banking, are indicated for transactions.

The PA needs to ensure compliance of the infrastructure of the merchants to security standards like PCI-DSS and PA-DSS, as applicable.

Merchants are not allowed to store payment data irrespective of their being PCI-DSS compliant or otherwise.

Security, fraud prevention, and risk

Merchant’sMerchant’s compliance with PCI standards: In line with the PA Guidelines, the RBI has reiterated the responsibility of PAs to ensure compliance of merchants onboard them to security standards, that is, the Payment Card Industry-Data Security Standard (“PCI-DSS” “) and Payment Application-Data Security Standard (“PA-DSS”), as applicable.

Impact of the Regulation Of Payment

Online payments also promote other impacts across the economy, including heightened productivity through fairer allowance bond administration, ICT adoption, and heightened competition.

A payment aggregator allows a merchant to start accepting payments sooner. In addition, most payment aggregators offer their services at a flat rate, making it easier for merchants to manage their budgets while also saving them money.

Payment gators are service providers through which e-commerce merchants can process their payment transactions. As the  Aggregators allow merchants to accept credit card and bank transfers without adding a merchant account with a bank or card association, it is the easiest and most valuable method for people. 

Conclusion 

Regulation of payment gives a secure way of payment. It can be useful for merchants as well customers. It designates the Reserve Bank of India as the authority for that purpose and fosters connections in addition to unexpected situations. 

The guidelines suggest better payment aggregation to keep a great track of the payment system.

Though They’re too expensive and some of the customers can afford them. Retailers have long rebuked payment gateways for their high processing costs.

They like to keep their fee structure hidden. Though additional needs to incorporate are provided by the RBI into these guidelines.