Payment Aggregator (PA)

Payment aggregators Two fintech startups recently received the final licence from the Reserve Bank of India (RBI) to operate as payment aggregators.

About Payment Aggregator (PA):

• Payment aggregator is a financial technology company that enables businesses to accept various payment methods, including debit cards, credit cards, UPI, and bank transfers.
• They act as intermediaries between merchants and financial institutions.
• PAs are incorporated under the Companies Act, either 1956 or 2013.

Authorization and Regulation

• Non-bank payment aggregators must obtain authorization from the RBI under the Payment and Settlement Systems Act, 2007.

Types of Payment Aggregators in India

• Third-party payment aggregators: Independent companies that offer a wide range of payment options through partnerships with multiple payment providers.
• Bank payment aggregators: Owned and operated by banks, offering a more limited range of payment options but potentially higher security and reliability.

Features and Functions

• Payment aggregators assist businesses in setting up sub-merchant accounts, which are essential for processing transactions.

Operational Process

• To accept payments, businesses first create an account with a PA, which then provides them with merchant accounts.
• At the checkout page, customers choose their preferred payment method. The acquiring bank receives the transaction details, and the card company conducts a fraud check.
• After approval, the issuer sends funds to the acquiring bank, which then transfers them to the merchant’s account.

Security and Efficiency

• Payment aggregators prioritize security measures to prevent fraud and protect customer data.
• The onboarding process for merchants is streamlined to be efficient, often completed within a few days.

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