Under the Reserve Bank of India's (RBI) new Payment Aggregator Cross-Border (PA-CB) guidelines, stringent regulation and harmonization of payment rules have been enforced on the Indian digital payments sector. The new mandate, which was issued today, involves entities like PayPal (NASDAQ:PYPL), Cashfree, Paymate, and startups such as Skydo. This marks a significant shift in the operational landscape of the sector.
The RBI's rule mandates compliance from entities such as Payment Aggregators (PAs) and Authorized Dealer (AD) Banks engaged in online payments for export or import transactions. The focus is particularly on cross-border payments. The rules transition account management from sponsor banks or authorized dealers to payment firms, essentially converting it to a full stack payment system.
All companies are now required to obtain a license. This requirement comes despite counter arguments like PayPal's technology service provider claim at a July Delhi High Court hearing. The RBI mandate dismisses such claims and enforces direct supervision over all players.
The process of obtaining a Payment Aggregator license is challenging, with numerous firms still awaiting final approval even though they have secured principal approval from the RBI. This significant sector shift imposes substantial compliance costs on these entities, thereby marking a drastic change in the operational landscape of the sector.
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