RBI issues the Reserve Bank of India (Regulation of Payment Aggregators) Directions, 2025

The Reserve Bank of India (“RBI”) has recently issued the RBI (Regulation of Payment Aggregators) Directions, 2025 vide notification dated September 15, 2025 (Master Direction), which includes revised directions as well as consolidates all the earlier regulations  concerning Payment Aggregators (PAs) issued by the RBI. The salient features of the Master Direction, include inter alia, the following: (i) rationalization of the definition of various categories of PAs; (ii) authorization process; (iii) process for carrying out due diligence of merchants by PAs; and (iv) permissible operations in escrow accounts. These regulatory measures are part of the RBI’s ongoing efforts to strengthen the digital payments infrastructure, enhance consumer trust, and support the orderly growth of the payments sector in India.

The key aspects under the Master Direction include, inter alia, the following:

1. Rationalisation of the Definition of ‘Payment Aggregator’ 

Under the Master Direction, ‘payment aggregator’ has been defined as an entity that facilitates aggregation of payments made by customers to the merchants through one or more payment channels through the merchant’s interface (physical/virtual) for purchase of goods, services or investment products, and subsequently settles the collected funds to such merchants. PA is categorized as: (i) PA – Physical (where both the acceptance device and payment instrument are physically present in close proximity while making the transaction); and (ii) PA – Cross Border (PA-CB) (PA that facilitates aggregation of cross-border payments for current account transactions, that are not prohibited under Foreign Exchange Management Act, 1999, for its onboarded merchants through e-commerce mode).

2. Authorisation and Capital Requirements for PA Business 

A bank does not require authorization to carry out PA business. However, a non-bank entity (which shall be a company incorporated in India under the Companies Act, 2013) shall seek authorisation for operating as a PA by submitting an application through RBI’s online portal. Further, an entity seeking authorisation to commence or carry on PA business shall: (i) have a minimum net-worth of INR 15 crore at the time of tendering application for authorisation; and (ii) shall attain a minimum net-worth of INR 25 crore by the end of third financial year of grant of authorisation. Further, this minimum net worth (as applicable) shall be maintained by a PA on an ongoing basis.

3. Due Diligence by PA

A PA shall inter alia:

• • • Undertake customer dule diligence (CDD) of its merchants in accordance with the Master Direction – Know Your Customer (KYC) Direction, 2016 (MD on KYC);

• • • While onboarding, the PA shall, with merchant consent, retrieve the merchant’s KYC record from Central KYC Records Registry, and shall undertake background and antecedent check of the merchant;

• • • A PA shall ensure that a marketplace onboarded by it does not accept payments for a seller not onboarded on to the marketplace’s platform;

• • • The PA must also monitor transactions subsequently undertaken by the merchants to ensure that these transactions are in line with latter’s business profile and ensure adherence to other aspects of MD on KYC while conducting its operations.

4. Escrow Accounts of PA

A non-bank PA is required to maintain the funds collected on behalf of its merchants in a separate escrow account with any Scheduled Commercial Bank (SCB) in India. In case of a PA – CB, such account shall also be referred to as Inward Collection Account (InCA) for inward transactions and Outward Collection Account (OCA) for outward transactions, as applicable. Such escrow accounts shall only be utilised for authorised PA business and not for any other business.

For more details, kindly refer to the Master Direction published by the RBI, made available by clicking on this link.