Draft Regulation of Payment Aggregators – physical Point of Sale

The Payments Vision 2025 outlined by the RBI underscores the need for direct regulation of PA-POS transactions. This directive was further reinforced in the “Statement on Developmental and Regulatory Policies” dated September 30, 2022, signaling a significant shift in regulatory approach.

The annex accompanying the circular provides detailed guidelines for entities engaged in face-to-face payment transactions (PA-POS). These guidelines encompass various aspects, including the requirement of authorization, net worth criteria, and compliance obligations.

Non-bank entities offering PA-POS services are required to seek authorization from the RBI within a specified timeline. Existing entities must intimate their intention to seek authorization within 60 days of the circular’s issuance and apply for authorization by a designated deadline. Non-bank PAs authorized for online transactions are also required to seek approval from the RBI to continue their PA-POS activities.

Compliance with governance, security, and risk management guidelines is paramount for entities engaged in PA-POS transactions. The circular mandates adherence to these guidelines within a stipulated timeframe, with continued compliance being a key factor in the authorization process.

The circular also outlines net worth criteria for non-bank PAs operating at physical Points of Sale. Existing entities must meet minimum net worth requirements at the time of application and maintain it thereafter. New entrants are given a timeline to achieve the prescribed net worth, with compliance being a prerequisite for authorization.

Entities failing to comply with the net worth requirements or failing to seek authorization within the specified timeframe are mandated to cease their PA-POS activities. Banks are directed to close accounts used for PA activities of non-bank entities that fail to comply with regulatory requirements.

In essence, the regulation of Payment Aggregators at physical Points of Sale signifies a proactive approach by the RBI to ensure the integrity and stability of the payments ecosystem. By establishing clear guidelines and compliance measures, the RBI aims to foster innovation while safeguarding the interests of consumers and promoting financial inclusion.

Comments / feedback on the draft directions may be sent by email or by post to the Chief General Manager-in-Charge, Department of Payment and Settlement Systems, Reserve Bank of India, Central Office, 14th Floor, Shahid Bhagat Singh Marg, Mumbai-400001, on or before May 31, 2024.