On 17 March 2020, the Reserve Bank of India (RBI) released Guidelines on Regulation of Payment Aggregators and Payment Gateways , which said that Payment Aggregators (PAs) and Payment Gateways (PGs) are intermediaries playing an important function in facilitating payments in the online space. Accordingly, PAs and PGs have been defined as follows-
PAs are entities that facilitate e-commerce sites and merchants to accept various payment instruments from the customers for completion of their payment obligations without the need for merchants to create a separate payment integration system of their own. PAs facilitate merchants to connect with acquirers. In the process, they receive payments from customers, pool and transfer them on to the merchants after a time period.
PGs are entities that provide technology infrastructure to route and facilitate processing of an online payment transaction without any involvement in handling of funds.
On applicability of the guidelines, it said that only PAs would be covered under it, including domestic leg of import and export related payments facilitated by PAs . As a measure of good practice, the PGs may adhere to these baseline technology-related recommendations. The guidelines are not applicable to Cash on Delivery (CoD) e-commerce model, it further added.
While the guidelines lays down a comprehensive list of provision which the PAs will have to compy with, merely two weeks’ time have been given to these PAs to put a proper compliance framework in place.
“It may be noted that these guidelines are issued under Section 18 read with Section 10(2) of the Payment and Settlement Systems Act, 2007 and shall come into effect from April 1, 2020 other than for activities for which specific timelines are mentioned,” it said.
NASSCOM has requested RBI to extend the date of implementation of the guidelines until the time the industry stabilizes from the impact of COVID-19. We have explained that this is a difficult period for the industry and there are many immediate issues, which needs to be taken care of. The industry is not in a position to put an appropriate framework in place, in order to comply with the norms provided in the Guidelines. Therefore, we have sought an immediate relief for the industry by extension of the date of implementation of Guidelines.
We have also highlighted the need to relook at the provisions of the Guidelines and consider a risked based approach of regulating the Payment Aggregators and Payment Gateways. [Kindly refer to our submission on the Discussion Paper on Guidelines for Payments Aggregators and Payment Gateway].
NASSCOM has submitted industry’s view that RBI should have ideally placed a draft version of the guidelines for industry consultation after feedback on the Discussion Paper. We have also expressed the willingness to organize an industry consultation on the same and submit the feedback to RBI.
We are still awaiting RBI’s response on our representation. We will update the blog accordingly.
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