NEWS – RBI’s releases Draft Rules for Payment Aggregators (PAs)

HIGHLIGHTS

Payment Aggregators (PAs)

• Definition and Role: PAs facilitate online transactions by collecting payments from customers on behalf of merchants, acting as intermediaries.
• Working of PAs: They collect payments, transfer funds to merchants, ensure settlement, provide security measures, and offer integration tools for businesses.

RBI’s Draft Rules for Payment Aggregators

• Extension to Offline Spaces: Proposed regulations extend to offline transactions, aligning standards across online and offline PAs.
• Regulatory Lessons: Learnings from the PPBL crisis highlight the need for enhanced KYC adherence and transparency in operations.
• Strengthening Ecosystem: RBI aims to fortify the payment ecosystem against illegal activities and improve data collection standards.

Mandatory Registration and Compliance

• Focus on Non-Bank PAs: Non-banking entities, especially offline extensions, must seek authorisation and comply with revised guidelines.
• Financial Requirements: Minimum net worth criteria set by RBI with deadlines for compliance to ensure sustainability.
• Consequences of Non-Compliance: Entities failing to comply with approval-seeking timeframe face closure directives from RBI.

KYC Requirements and Data Privacy

• Scope of KYC: Regulations categorise merchants into small and medium categories, requiring contact point verification and bank account verification.
• Data Privacy Measures: Restrictions on data storage for face-to-face payments, allowing limited data retention for transaction tracking.
• Compliance Responsibility: Emphasis on card networks to ensure adherence to data privacy regulations.