Understanding Payment Aggregator License

The podcast, featuring Venkatesh Rangan, Vice President of Compliance at Worldline India, delves into the critical role of payment aggregator licences in the finance sector. Venkatesh explains that a payment aggregator acts as an intermediary, connecting numerous customers with various merchants. The payment aggregator collects funds from customers and settles them with the merchants, handling the entire transaction process and settlement.

Over the past decade, the digital payments landscape in India has undergone a massive transformation. The volume of digital transactions has seen a significant surge thanks to advancements in digital technologies, government initiatives and changing consumer preferences, with India emerging as a global leader in this sector.

In 2020, the Reserve Bank of India (RBI) introduced the Payment Aggregator and Payment Gateway (PAPG) guidelines. Venkatesh highlights the reasons for the RBI's regulation of payment gateway companies. The unprecedented growth in digital payments also led to an increase in risks like money laundering and suspicious transactions, necessitating RBI's intervention to ensure regulatory oversight. The regulation was formulated to mitigate risks and manage this sector sustainably.

In recent months, several online payment companies and large merchant companies, including Worldline E-Payments India, have received payment aggregator licences from the RBI. Many fintech companies and large enterprises are also applying for a PA (Payment Aggregator) licence. The primary driver behind this surge is economic - non-fintech entities and non-PAPGs face substantial fees, leading to escalating costs that can reach hundreds or thousands of crores for large entities. Obtaining a PA licence not only reduces compliance costs but also aligns with regulatory requirements, making it a financially prudent choice.

In his closing remarks, Venkatesh underscores the significance of having an online PAPG license, a milestone for any entity, including Worldline. From a macroeconomic standpoint, the regulator's goal is to bring all digital payment modes and sectors under a common regulatory framework. This ensures that India's digital transformation remains sustainable, transparent, and well-regulated. Venkatesh aligns this vision with Worldline's strong focus on compliance, emphasising the crucial role of regulatory adherence in ensuring secure and regulated digital payment processing.

We hope you found the discussion on payment aggregator licences insightful. Stay tuned for the next episode of Paytech Bytes. You can reach us at ⁠⁠⁠⁠marketing.worldlineindia@worldline.com.