RBI proposes draft rules to regulate PoS for payment aggregators

The Reserve Bank of India (RBI) on Tuesday released draft regulations for the physical point of sale (PoS) for certain payment aggregators such as Pine Labs, Innoviti and MSwipe, among others.

As per the RBI release, the banking regulator has asked the payment aggregators to apply for PoS authorisation from RBI by May 31, 2025.

Notably, the payment aggregators will have to inform the banking regulator about their intent to apply for PoS service in 60 days from the date of issue of the draft rules. For banks, which provide services to payment aggregators, the RBI authorisation is not required but they must ensure compliance with regulations within three months of the issue of draft rules. Moreover, non-banking entities providing services to payment aggregators must also seek authorisation from RBI in 60 days from the date of issue of the draft rules.

Non-banking entities looking to apply for a payment aggregator service license must have a minimum net worth of ₹15 crore while applying to RBI, as per the new guidelines. Non-banking services who already have a payment aggregator license must have a net worth of ₹25 crore by March 31, 2028, and shall maintain a net worth of ₹25 crore by all times.     

"Existing PAs (both authorised PAs, as well as PAs whose application is pending with RBI as on the date of this circular) shall ensure that for all existing merchants (both online and physical), the due diligence process, prescribed above shall be completed by September 30, 2025. Entities providing PA-P (physical payment) services as on the date of this circular shall complete this process within a period of 12 months from the date of submission of the application for authorisation. Quarterly reports shall be submitted to the concerned Regional Office of RBI detailing progressive compliance for the same," says the apex bank.       

Apart from this, the apex bank revised the definition of payment aggregators stating, “entities which on-board merchants and facilitate aggregation of payments made by customers to such merchants, for purchase of goods and services, using one or more payment channels, in online or physical Point of Sale payment modes through a merchant’s interface (physical or virtual), and subsequently settle the collected funds to such merchants.”

It also says the escrow account opened by the payment aggregator can be used for online and physical payment activities. Funds in respect of delivery versus payment transactions shall be routed through the escrow accounts. The cash-on-delivery transactions, however, are not routed throw escrow accounts. The development comes months after the apex bank in November last year issued rules on the regulation of payment aggregators dealing in the processing and settlement of small-value export and import-related payments.