In a discussion paper on guidelines for payment aggregators and payment gateways, the RBI has suggested that payment aggregators and gateways would need to be authorised/licensed by it under the Payments and Settlements Act, 2007. Both bank and non-bank providers would have to get RBI's authorisation, be a company incorporated in India, and would have to localise payments data. The discussion paper, drafted by the Department of Payments and Settlements Systems can be seen below. The RBI's discussion paper laid out three ways of regulatory approaches to payments gateways and aggregators. First, continue with existing directions. Second, limited regulation in which payments aggregators and gateways shall follow RBI guidelines around major aspects, along with phased licensing and only off-site monitoring. But the third approach, which suggests that payment aggregators and gateways be fully and directly regulated, has been extensively elaborated in the paper. Licensing by the RBI is a part of this approach. Under the direct and full regulation approach, payments aggregators and gateways would have to comply with capitalisation norms within a year, and would be subject to on-site and off-site monitoring. They have to: ensure that merchants and they themselves do not pass on MDR to customer while accepting payments via debit cards maintain funds in an escrow account with a commercial bank only deal with merchants who have a physical presence in the country They cannot: place the limit on transaction amounts for payments models. This will be decided by the issuing bank/entity. invoke ATM PIN as a…
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