Source: BL
Context:
PhonePe received final authorisation from the Reserve Bank of India (RBI) to function as an online payment aggregator (PA). Enables PhonePe to directly onboard merchants, especially small and medium enterprises (SMEs), and expand its digital financial services.
What is a Payment Aggregator (PA)?
- A Payment Aggregator facilitates merchants to accept digital payments from customers by integrating multiple payment methods (cards, UPI, wallets, net banking) into a single gateway.
- RBI Regulation: Introduced in March 2020 under RBI’s Guidelines on Regulation of Payment Aggregators and Payment Gateways.
- Requirement: Non-bank entities must obtain RBI authorisation to operate as a PA.
Significance of RBI Approval for PhonePe
- Expansion to SMEs:
- Focus on small and medium businesses that are underserved by traditional digital payment solutions.
- Supports India’s digital financial inclusion agenda.
- Merchant Benefits:
- Secure, reliable, and compliant payment gateway.
- Smooth checkout experience for customers.
- Instant onboarding and developer-friendly plug-ins for fast integration.
- Strategic Edge:
- Strengthens PhonePe’s position in the fast-growing digital payments ecosystem.
- Competes with other RBI-authorised players like Razorpay, PayU, and Cashfree.
RBI’s Role and Regulatory Relevance
- RBI’s Objective: To ensure customer safety, fraud prevention, and orderly development of digital payments.
- Key Guidelines:
- PA/PG Framework (2020): Mandated authorisation for non-bank PAs.
- Minimum Net Worth Requirement: ₹15 crore at the time of application, rising to ₹25 crore by the end of the third financial year.
- Governance & Compliance: Fit-and-proper criteria, escrow account maintenance, grievance redressal mechanism.
