RBI issues new master direction for payment aggregators, proposes changes to existing rules

The Reserve Bank of India (RBI) on September 16, 2025, issued a comprehensive Master Direction on the regulation of Payment Aggregators (PAs), consolidating earlier guidelines and new regulatory measures for online, offline and cross-border payment aggregation businesses.

According to the RBI, the move aims to streamline compliance, ensure customer protection, and enhance the oversight of entities handling large volumes of digital transactions. The directive applies to all payment system providers, system participants, authorised dealer banks, and scheduled commercial banks.

The regulator has formalised the payment aggregators into several groups to regulate their specific activities. For instance, the PA-Online facility will regulate aggregators facilitating e-commerce transactions and other online payments. Then there is PA- Physical. It will facilitate transactions where both the acceptance device and payment instrument are physically present in proximity. And PA-Cross-Border. It will enable specific rules for aggregators that handle cross-border transactions.

The Directions entail, inter alia, the following: rationalisation of the definition of various categories of PAs; the authorisation process; the process for carrying out due diligence of merchants by PAs; and permissible operations in escrow accounts, as per the RBI circular.

Drawing a clear distinction between banks and non-banks, the new master directions allow banks to continue running their PA businesses without fresh approval. However, non-bank players, which include all startups, will have to apply for fresh authorisation by December 31. Those failing to comply with the norms will have to wind up their operations by February 28, 2026.

The new framework supersedes previous circulars, including the 'Guidelines on Regulation of Payment Aggregators and Payment Gateways' issued on March 17, 2020, and March 31, 2021, as well as directions on cross-border payment aggregators notified on October 31, 2023.

In April 2024, the central bank sought public feedback on draft directions covering Payment Aggregators operating at physical points of sale and amendments to existing regulations. After reviewing stakeholder inputs, the RBI has now finalised the master direction.

"The direction has been issued under Section 18, read with Section 10(2) of the Payment and Settlement Systems Act, 2007, and the relevant provisions of the Foreign Exchange Management Act (FEMA), 1999. It provides a unified regulatory framework for various categories of payment aggregators, including online, offline, and cross-border operators," RBI stated in a circular.