The story comes up with the ambition of digitalization and innovation in the Banking and Financial Service Industry back in 2000 by the Reserve Bank of India. The process is ongoing but nowadays, the system has witnessed drastic innovation and scalability in Finance Business, precisely in the Payment Industry. Today’s Payment Industry was a myth a few years back but the challenge and momentum caught by the Payment Industry is appreciable. Massive Cheque clearance activities are somehow to extend managed well enough to address the payment channel. It is observed either e-commerce or grocery shop at the local market has practised well enough to crystallize the payment system idea into reality. Credit goes to demonetization too, which obviously helps people to digitize their currency as payment mode via wallet and other instruments easily and conveniently. Nowadays, people prefer digital wallets instead of cash carried in their pockets. News is awesome and the same has challenges as far as regulatory approval and commencement of business is a matter of fact.
Identifying the Stakeholders:
Moving ahead to understand the major stakeholders in the payment industry, its Prepaid Payment Instrument, Aggregator and Gateway. Prepaid Payment Instrument is well versed and aware to all, as all the licensing policies to compliance and exit regulation have been well articulated, and practised and the industry set is ready. However, while coming to Payment Aggregators and Payment Gateway, again Regulators and Industry People need in-depth working experience and practice cases, as many industry players thought these two different products as packets and not different altogether.
Question: Are the Payment Aggregator and Payment Gateway are same?
Today in the market, we can observe various players doing aggregator and gateway business as packets and the early stage stone kept on this prototype is in early 2009. Where the Reserve Bank of India (RBI) issued operating guidelines on the recommendation nature to practice the Aggregator and Gateway business. However, in 2019, the draft regulation is placed for public comments which have been now issued on 17th Nov 2020 as “Guidelines on Regulation of Payment Aggregators and Payment Gateways”. Now applicable guidelines to all the operating aggregators and gateway to get them registered and complied with regulation in the given time frame. However new players can keep this guideline as principal documents to move for a license to do Payment Aggregator and Gateway basis. The entrepreneur has to decide the mode of its business license and operating viability thereon.
Writeup will not engage in explaining the rules and regulations, instead the prime focus is to aware the public at large of the interpretation and its operating manual, not as packets but different products such as Payment Gateway and Payment Aggregator. Let’s solve the above question with differentiating perspectives as below: -
|Basis||Payment Aggregator||Payment Gateway|
|Definition||Entities that facilitate tripartite money management for the consumption of services, goods or both||Entities that provide technology infrastructure to route and facilitate the processing of an online payment transaction|
|Industry||E-commerce and Merchant to accept various instruments from customers||Open for all|
|Money||It holds Money||It does not hold Money|
|Process||It receives payments from Customers, and Pool and transfers them to the merchants after a time period||Collects information on cipher text, transfer between sender, receiver and involve stakeholders to materialize the execution on a secured platform|
|Technology Baseline||Pool Fund Management Company with Baseline Technology of Payment Gateway||Core Technology Company|
Ample entities are doing this business practice based on Guidelines issued earlier in 2009 and a letter of acknowledgement receipt from Regional RBI, is now required to go for a Certificate of Authorization with a Minimum Net Owned Fund of INR 15 Crore to Central, Reserve Bank of India by 30th Sept 2021.
Often it is observed and understood the Payment Aggregator and Payment Gateways are the same, as packets from various Industry people whereas we stand it as not same but 360-degree different products as nomenclature and operating modes are totally different. The understanding of taking an aggregator license will empower us to act as a gateway too is not true at all as far as the regulator is aware and concerned. Hope the matter is clear and more transparent on the subject line.
This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.
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