Payment aggregators: who are they and what do they do?

If you have an e-commerce business, you must already know the essential role of online payments. Sending or receiving money through online transactions has become an everyday part of life for everyone – be it an offline store, e-commerce business or a customer.

These payments in the online space are facilitated by a number of intermediaries or entities that act as the bridge between the providers of goods or services (merchants) and the customers. The intermediaries involved in payment collection and settlement between customers and merchants include banks providing payment gateway services, non-bank aggregators of merchants and payment options/instruments, technology service providers supporting payment gateway operations, e-commerce marketplaces, etc.

In this article, let us understand more about payment aggregators:

What is a payment aggregator?

Payment Aggregators are entities that enable e-commerce websites, mobile apps, and merchants to accept various payment instruments from customers for the completion of their payment obligations – without the need for merchants to create a separate payment integration system of their own.

In the process, they receive payments from customers, pool and transfer them on to the merchants after a certain time period.

What is the difference between a payment gateway and a payment aggregator?

Payment Gateways are entities that provide technology infrastructure to route and facilitate processing of an online payment transaction without any involvement in the handling of funds. They only handle the transfer of data between the entities in a transaction.

However, payment aggregators may also provide services that include the generation of settlements via netting of the funds received by the merchants onboarded by them. By being the bridge between consumers at one end and merchants at the other end, these service providers play a role in processing and completion of the payment transactions.

Who can be a payment aggregator?

The payment aggregator framework, introduced formally in March 2020, mandates that only firms approved by the RBI can acquire and offer payment services to merchants.

Companies applying for a payment aggregator license need to fulfill certain guidelines set by RBI that involve minimum net-worth, merchant on-boarding, timelines for settlement of funds, maintenance of escrow account, IT security, etc.

Status of Applications received from Online Payment Aggregators (PAs) under Payment and Settlement Systems Act, 2007 – As on February 15, 2023

Table A: Existing PAs who can operate as Online Payment Aggregators

* No new merchants to be onboarded until advised otherwise.

# Permitted to apply within 120 days from the date of return. Thus, can continue business subject to the condition that no new merchants should be onboarded until advised otherwise.

Table B: New PAs who have been granted in-principle authorisation and whose application is currently under process – Cannot operate

Table C: List of PAs whose applications were returned / withdrawn - Cannot operate

Existing PAs were advised to stop online payment aggregation activity and close nodal / escrow account(s) within a period of 180 days from the date of return of application.

Ω Applications were withdrawn by these entities.

Note: RBI has granted in-principle authorisation to Worldline ePayments India Private Limited on 20th December 2022 to operate as a Payment Aggregator (PA).
Worldline Group had applied to the Reserve Bank of India (RBI) to act as a Payment Aggregator (PA) pursuant to Guidelines on Regulation of Payment Aggregators and Payment Gateways dated March 17 2020, for its two independent entities in India – Worldline ePayments India Private Limited and Worldline India Private Limited.

Subsequently, it was decided to consolidate the payment aggregation business and continue with one single PA application for Worldline ePayments India Private Limited. Accordingly, the PA application for Worldline India Private Limited was withdrawn.

Source: Reserve Bank Of India (https://www.rbi.org.in)