Google, Jio Get Payment Aggregator Nod
The approvals have come from the RBI though there could be some delay in their becoming operational as payment nodes approved by the central bank
India’s next milestone in the open eCommerce networks got a boost in the arm with the Reserve Bank (RBI) giving in-principle approval to 32 companies to operate as digital payment aggregators. Notable names on this list include Amazon and Google with Reliance Jio’s own payment solution company also throwing its hat into this ring.
Once the paperwork is in place and the technology is tested and approved, these online payment aggregators would be onboarding digital merchants and accepting payments on their behalf. Of course, the central bank would have to first approve their licenses as the current status is only an in-principle clearance.
What do payment aggregators do?
As a concept, payment aggregation is a model where a third-party payment provider signs up merchants directly under its own unique identification number to process transactions via a single master account. While Google Pay, Amazon Pay, Paytm etc. have been operating in this space for some time, the government wants to decentralize even aggregation, which is why it is offering to include more entities into this crucial bucket to assist decentralized eCommerce.
In September 2021, Infosys co-founder and Chairman Nandan Nilekani had shared his views on the account aggregation framework. He said such a move would help SMEs and individuals better access financial services and could end up replicating the success of UPI in the digital payments ecosystem.
Nilekani, who had chaired the RBI committee on Deepening Digital Payments, also said the launch of this framework would immediately see an uptick in activity as consumers and small businesses will leverage their data to get access to financial services. He said India was the first country to introduce such a techno-legal network that allows regulated flow of financial data.
Companies that received the in-principle nod from RBI to operate as payment aggregators include NSDL Database Management, Innoviti Payment Solutions, Reliance Payment Solutions, Infibeam Avenues, Lyra Network, Open Financial Technologies, Razorpay Software and Pine Labs among others.
This is the first time RBI has shared a list with application status for all the payment aggregators calling it a move towards “greater transparency.” The regulator would update the list once every fortnight and per the latest information, the government is scrutinizing these applications, which is why the approvals are in-principle only. There are 18 applications, including one from PhonePe that is also being reviewed.
Paytm, PayU among those that got rejected
The data also indicates that RBI has returned four applications, including those from the Axis Bank-led FreeCharge, Paytm Payments and PayU Payments. There is no information on what caused RBI to take this step and what would be the next updates on this front.
In a statement the Bank said, “All stakeholders are advised to transact with only those existing payment aggregators that have been granted in-principle authorisation, or whose application is currently under process.” It also clarified that those applications that were returned could be filed once again within 120 days and till such time they cannot onboard merchants.
The aggregator framework was put in place formally from March 2020 and under the rules framed by RBI, the eligibility criteria for a company applying for an aggregator authorisation is a minimum net worth of Rs 15 crore in the first year of application, subsequently climbing up to Rs 25 crore by the second year.
