The Reserve Bank of India vide its notification dated 17th March 2020 has issued guidelines for regulating payment aggregators and payment gateways and facilitating payments in the online space.
Under the new guidelines, the payment aggregator (entities that facilitate e-commerce sites and merchants to accept various payment instruments) should be a company incorporated in India under the Companies Act, 1956 / 2013 and the Existing non-bank entities offering PA services shall apply for authorization on or before June 30, 2021.
The Payment aggregator shall adhere to strict security guidelines, adhere to all KYC (Know Your Customer) and AML (Anti Money Laundering) rules. Further the guidelines have also mandated that PAs need to check their merchant customers are not involved in selling of prohibited or fake items.
It has also specified financial requirements for aggregators existing on the date of this circular to achieve a net worth of ₹15 crore by March 31, 2021 and a net worth of ₹25 crore by the end of third financial year, which means or before March 31, 2023. The net-worth of ₹25 crore shall be maintained at all times thereafter. Net-worth shall consist of paid-up equity capital, preference shares that are compulsorily convertible to equity, free reserves, balance in share premium account and capital reserves representing surplus arising out of sale proceeds of assets but not reserves created by revaluation of assets adjusted for accumulated loss balance, book value of intangible assets and deferred revenue expenditure if any.
Compulsorily convertible preference shares can be either non-cumulative or cumulative, and they should be compulsorily convertible into equity shares and the shareholder agreements should specifically prohibit any withdrawal of this preference capital at any time.
RBI has also made it necessary for payment aggregators and gateways to appoint a nodal officer responsible for regulatory and customer grievance handling functions.
Click here to read the Notification.
