Industry's feedback on the RBI's Payment Aggregator - Cross Border Regulation | nasscom | The Official Community of Indian IT Industry

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Industry's feedback on the RBI's Payment Aggregator - Cross Border Regulation

Garima Prakash

@GarimaP

December 22, 2023

Public Policy

On December 19, 2023, we wrote to the Reserve Bank of India (RBI) highlighting industry's feedback and gave suggestions on the Regulation for Payment Aggregators - Cross Border (PA-CB Regulation). Our feebdack included the following:

The KYC requirement for PA-CB services should be reconsdiered, with a view to adopt a risk-based approach. This will enable a balance between ease of doing business for the industry and addressing money laundering/terrorism financing concerns.
Timelines given to the industry to adapt to the new PA-CB Regulation should be extended. This will enable minimum disruption to the import-export of goods and services.

In addition to the above, we sought a number of clarifications for effective compliance with the PA-CB regulation. Some of our queries are:

Can adherence to PA-PG Guidelines take place within 90 days after the grant of PA-CB authorisation from the RBI? This is important to understand since the applicant should not be required to adhere to additional compliances without being aware of the fate of its PA-CB application.
Is this net worth requirement at an entity level or at activity level? For example, if an entity has achieved this required net worth for PA license, does that suffice for PA-CB business as well? Or the entity needs to have an additional net worth of ₹15/25 crore for the PA-CB business?
Can a PA having operations in multiple jurisdictions onboard its group entity providing PA or similar services abroad? This group entity may not necessarily be categorised as a PA in that jurisdiction and may be known by some other name.
Is it correct that - in case a foreign PA/marketplace has been onboarded by the PA-CB, the KYC needs to be undertaken for the foreign PA/marketplace only, and not the individual overseas merchants registered on overseas PA. In our conversation with the industry, it appeared that there is some difference of view on this point.
Whether the RBI would be ok to consider that an overseas merchant has complied with customer due diligence requirements if it has fulfilled customer due diligence norms of that specific jurisdiction? If not, what level of proof of identity and proof of address of other jurisdictions would be acceptable under India’s Customer Due Diligence (as defined in the Master Direction – Know Your Customer Direction, 2016).
Does the requirement to do Customer Due Diligence (as defined in the Master Direction – Know Your Customer Direction, 2016) also apply to already onboarded merchants in India? If yes, what is the timeline for the same?
It would be difficult to quantify a service in the number of units. How should this situation be dealt with in terms of identifying whether the transaction is permitted under PA-CB regulation? How will unit measure work while calculating the limit for services?

For more information, kindly write to garima@nasscom.in with a copy to policy@nasscom.in.

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Garima Prakash

Manager, Public Policy and Government Affairs

Reach out to me for all things policy about e-commerce, international trade, export controls, start-ups and fintech