Payment Aggregator License Services

A payment aggregator is a third-party service that facilitates payments for customers and enables businesses (merchants) to accept them online.

It acts as a comprehensive payment platform that allows businesses to accept payments through numerous methods, such as:

• Debit Cards
• Credit Cards
• UPI
• Digital Wallets
• Bank Transfers
• Cardless EMIs
• E-mandates

In India, payment aggregators must obtain a license from the Reserve Bank of India (RBI) to onboard merchants and provide them with the necessary tools and systems to accept and manage digital payments. This function is regulated under the “Guidelines on Regulation of Payment Aggregators and Payment Gateways” (2020), which came into effect on March 31, 2021.

In India, payment aggregators are broadly classified into two types based on who operates them and their regulatory requirements.

1. Bank Payment Aggregators

• Bank payment aggregators are operated directly by banks and help businesses accept online payments through multiple payment methods.
• Since these are managed by banks, they do not need separate approval from the Reserve Bank of India (RBI) to operate.
• However, using a bank payment aggregator usually comes with higher setup costs and complex integration processes.
• Large corporations with dedicated tech teams may manage this easily, but startups and small businesses may find it expensive and time-consuming.
• Also, bank aggregators often do not offer value-added services like real-time analytics or business dashboards.

2. Third-Party Payment Aggregators

• These are non-bank entities that provide payment aggregation services and must be authorised by the RBI to operate.
• Third-party aggregators handle all the technical and operational work involved in processing payments from multiple methods (cards, UPI, wallets, etc.).
• They are generally more affordable than bank aggregators, with lower setup and annual maintenance costs.
• Because they offer easy integration, they are ideal for small and medium businesses.
• Additionally, they provide extra services such as sub-merchant onboarding, fraud detection, and analytics dashboards to help businesses track and manage payments efficiently.

As of 2025, Notable RBI-authorised Payment Aggregators include Razorpay, Cashfree, PayU, CCAvenue, Pine Labs, and Instamojo, among others.

No, a Payment Aggregator and a Payment Gateway are not the same, although both play key roles in online payment processing.

Here’s a simple breakdown to highlight the differences:

Let’s understand how payment aggregators help businesses accept payments online in a simple, step-by-step way:

Step 1: Merchant Registration

Before accepting payments, a business needs to sign up with a payment aggregator and create a merchant account. The payment aggregator has a special type of account called a nodal account with a bank, where all customer payments are collected. The bank doesn’t track the details of each transaction; it only sees the total flow of money in and out of the nodal account.

(Nodal Account: A non-interest-bearing account where customer funds are temporarily held before being settled to merchants, as per RBI rules).

Step 2: Customer Makes a Payment

When a customer visits your website or app to make a purchase, they choose a payment option (like card, UPI, wallet) and enter their payment details. The payment aggregator encrypts (tokenizes) this information and runs a quick fraud check.

Step 3: Payment Aggregator Sends Transaction Info

The aggregator forwards the transaction data to its bank (where the nodal account is).
The bank then sends the details to the payment processor, which connects to the card network (like Visa or Mastercard).

Step 4: Card Company Checks for Fraud

The card company runs another fraud check using the customer’s previous payment patterns and databases. Once cleared, the transaction details are sent to the customer’s bank.

Step 5: Customer’s Bank Approves or Declines

The bank checks if the customer has enough money and if the payment details are correct.
Then it sends back the status, approved or declined, through the same route:
Customer’s Bank → Card Network → Aggregator’s Bank → Payment Aggregator → Merchant → Customer.

Note: The flow for UPI or digital wallet transactions differs slightly, as confirmation is handled in real-time by the Payment Service Provider (PSP) app (like Google Pay or PhonePe).

Step 6: Funds Are Requested

If the payment is approved, the aggregator’s bank asks for the money from the customer’s bank. The money is received and stored in the aggregator’s nodal account.

Step 7: Funds Are Settled to the Business

At the end of the day, the payment aggregator transfers the total funds (lump sum) from all transactions to the business. Some aggregators also offer instant settlement options for quicker access to money.

To get a Payment Aggregator (PA) license from the Reserve Bank of India (RBI), a business must meet certain conditions.

1. Type of Business

• Only companies registered in India under the Companies Act, 2013, can apply.
• Proprietorships and partnership firms are not eligible.

2. Minimum Net Worth

• The company must have a minimum net worth of Rs. 15 crore at the time of application.
• It must increase to Rs. 25 crore within 3 years of getting the license.

3. Fit and Proper Promoters

• The company’s promoters and directors must be fit and proper, meaning they should have a clean track record, no criminal cases, and must be financially sound.

4. Technology Setup

• The company must have a safe and secure IT system to process online payments.
• It should follow RBI's cybersecurity guidelines and data protection rules.

5. Business Plan

• The company must have a clear business model and plans to handle online payments safely and efficiently.

Note: Existing payment aggregators who were working before RBI made licensing mandatory (March 2020) must apply and meet the same eligibility rules.

To obtain a Payment Aggregator (PA) license from the RBI, businesses must submit a set of documents that prove their legal status, financial stability, technical capability, and operational readiness.

1. Corporate Documents

• Certificate of Incorporation from the Registrar of Companies (RoC).
• Memorandum of Association (MoA) and Articles of Association (AoA).
• PAN Card of the company.
• Board resolution authorizing the application for the PA license.
• Shareholding pattern and details of parent/subsidiary entities, if applicable.
• Certificate of Registration with the Financial Intelligence Unit (FIU-IND), if applicable.

2. Director Documents

• PAN Card and Aadhaar Card (or valid ID proof) of all directors.
• Director Identification Number (DIN).
• Passport-size photographs.
• Address proof (electricity bill, bank statement, etc.).
• Declaration of fit and proper status of directors as per RBI guidelines.

3. Financial Documents

• Audited balance sheets for the last three financial years.
• Net worth certificate issued by a Chartered Accountant.
• Income Tax Returns (ITR) of the company and directors.
• Bank account statements.
• Details of funding sources and investor agreements (if any).

4. Business Documents

• Detailed business plan and revenue model.
• List of existing or proposed merchants.
• Description of customer grievance redressal mechanism.
• Risk management and fraud prevention framework.
• Information security and data privacy policy.

5. Technical Documents

• System architecture and infrastructure layout.
• PCI-DSS certification and other security audit reports.
• Business Continuity Plan (BCP) and Disaster Recovery (DR) policy.
• Technology partnership agreements (if using third-party platforms).
• API documentation and payment flow diagram.
• Information Security Policy aligned with RBI’s IT framework circular for PAs (including access controls, VAPT reports, and data localization details).

If you want to provide payment services like collecting money from customers and giving it to sellers (like Razorpay or Paytm), you need a Payment Aggregator (PA) license from the RBI.

Step 1: Register Your Company

To apply for a Payment Aggregator license, you must first register your business as a private limited company under the Companies Act, 2013. Only Indian companies are allowed to apply. Sole proprietorships, partnership firms, or LLPs are not eligible. If you already have a company set up, you can move to the next step.

Step 2: Meet the Net Worth Requirement

The Reserve Bank of India has set a minimum net worth limit of Rs. 15 crore at the time of application. This means your company’s total assets (minus liabilities) must be at least Rs. 15 crore. Additionally, you must increase your net worth to Rs. 25 crore within 3 years after getting the license. A Chartered Accountant must certify your net worth through proper financial documents.

Step 3: Prepare Important Documents

You will need to collect and submit several important documents with your application. These include your Certificate of Incorporation, PAN, MOA & AOA of the company, board resolution, and KYC documents of directors and promoters. You must also submit a net worth certificate issued by a CA, a detailed business model, and your company’s IT and data security policies.

Step 4: Set Up Secure IT Infrastructure

Since you’ll be handling online transactions, your company must have a safe and secure technology system. You need to follow RBI’s rules on cybersecurity, data storage, and customer data protection. You should also have systems in place for fraud detection, risk management, and grievance redressal for customers.

Step 5: Apply to the RBI

Once everything is ready, you need to submit your application to the RBI through their COSMOS portal or in the format prescribed by the RBI. Along with the application, upload all the required documents and declarations. Make sure everything is accurate and complete.

Step 6: Wait for RBI Review and Approval

After submission, the RBI will review your application. They may ask for additional documents or clarifications. If your company meets all the conditions and passes the due diligence, the RBI will grant the Payment Aggregator license. This process may take a few months, so be prepared for some waiting time.

Obtaining an RBI Payment Aggregator (PA) license involves several indirect costs related to compliance, legal documentation, technical infrastructure, and security standards. While the RBI does not charge any direct application or registration fee, businesses must invest in fulfilling the regulatory and operational requirements listed below:

Businesses seeking to operate as Payment Aggregators in India must comply with the RBI’s regulatory framework to ensure secure, transparent, and efficient payment processing.

1. Regulatory Compliance

• Adherence to RBI’s “Guidelines on Regulation of Payment Aggregators and Payment Gateways” (2020).
• Filing of regular compliance reports with the RBI.
• Appointment of a Grievance Redressal Officer.
• Ensuring KYC/AML norms for merchant onboarding.

2. Technical Compliance

• Mandatory PCI-DSS certification for secure card data handling.
• Implementation of data localization norms (all Indian transaction data must be stored locally).
• Regular Vulnerability Assessment and Penetration Testing (VAPT).
• Secure encryption and tokenization of customer data.

3. Operational Compliance

• Maintenance of a nodal account per RBI guidelines.
• Establishing a customer grievance redressal mechanism.
• Implementing a risk management framework for fraud prevention.
• Preparing and testing a Business Continuity Plan (BCP) and Disaster Recovery (DR) strategy.

To operate legally as a third-party Payment Aggregator in India, businesses must obtain authorization from the Reserve Bank of India.

Eligibility Criteria for PA License

• Must be a company incorporated in India.
• Minimum net worth of Rs. 15 crore at the time of application (to be increased to Rs. 25 crore within three years).
• Must have a board-approved governance framework.
• Should comply with the fit and proper criteria for directors and management.

Key Timelines

• Applications are accepted through RBI’s COSMOS portal.
• RBI may take 3–6 months or more to process, depending on document completeness and background checks.

Post-License Responsibilities

• Ongoing regulatory reporting.
• Periodic audits and inspections.
• Maintaining an updated IT and security infrastructure.
• Renewal or review of PA authorization as directed by RBI.