Payment Aggregator (PA) vs. Third-Party Payment Aggregator (TPA)

Context:

The Indian Railway Catering and Tourism Corporation (IRCTC), India’s largest online ticketing platform, is set to expand into the fintech space. Its wholly-owned arm, IRCTC Payments Limited, has received an in-principle approval from the Reserve Bank of India (RBI) to operate as a Payment Aggregator (PA). Currently, IRCTC uses multiple third-party aggregators and its in-house gateway iPay.

1. Payment Aggregator (PA)

• An entity that facilitates e-commerce sites and merchants to accept payment instruments (credit cards, debit cards, UPI, wallets, etc.) from customers.
• Role:
  • Collects funds from customers.
  • Pools the money into an escrow/nodal account.
  • Settles it to the respective merchants after a set time.
• Regulation:
  • Must obtain RBI authorisation under the Payment and Settlement Systems Act, 2007 (PSS Act).
  • Example: Razorpay, PayU, Cashfree, BillDesk.
• Direct Handling of Funds: Yes, they directly handle customer funds before settlement.

2. Third-Party Payment Aggregator (TPA / Third-Party PA)

• An intermediary that provides technology infrastructure to connect merchants with banks/payment gateways but does not handle funds directly.
• Role:
  • Acts as a technology service provider.
  • Payment flow is routed directly to the bank/authorised PA’s nodal account.
  • Does not pool or settle funds.
• Regulation:
  • Since they don’t handle funds, RBI does not mandate separate PA authorisation.
  • They must, however, comply with outsourcing & IT security guidelines issued by RBI.
• Examples: Some fintech companies that only provide APIs/SDKs to merchants without touching the money.

Key Difference

BS