The Reserve Bank of India (RBI), India’s Central Bank, has granted 32 existing payment aggregators “in principle approval” to act as online payment aggregators. Later 19 new entities also got approval. RBI is the first to publish a list of these companies, showing how seriously they are following the evolution of India’s digital and payments landscape.
Once approved in principle, companies must provide RBI with a Systems Review Report (SAR) and a Certified Public Accountant (CA) certificate indicating that net worth criteria have been met to be considered “licensed.” [permission]. Organisations must also comply with all other guidelines and any additional requirements established by the RBI if any.
What is a payment aggregator?
A payment aggregator is an intermediary that facilitates payments in commercial online transactions. These organisations allow mobile apps, e-commerce websites, and merchants to accept various payment methods from customers to fulfil their payments without requiring merchants to build separate payment integration systems.
It integrates various options for online payments, bringing them to a single place for merchants. Different types of payment transactions are facilitated by it, which include cash/cheque, offline touchpoints, or online payments through multiple payment sources.
This allows merchants to accept bank transfers without creating a merchant bank account. This means that merchants do not have to have direct trading accounts with banks. In essence, payment integrators are shouldering the heavy burden of integrating with various payment providers to provide a complete payment acceptance solution.
How does a payment aggregator work?
The steps involved in the working of payment aggregators are as such-
- When a customer enters the payment details to proceed with checkout, the integrated payment gateway tokenises the details, and a fraud check is performed.
- The acquiring bank or acquirer of the payment aggregator verifies the customer information and sends it to the appropriate card company using the payment processor.
- Once the card is verified by the company, and a fraud check is performed, the information is forwarded to the issuing bank via the payment processor.
- Here, the issuing bank is the customer’s bank, which verifies that the customer’s account has sufficient funds and verifies the details. Depending on the balance, it sends a reject or approval message to the card network.
- Through the acquiring bank, the information reaches the payment gateway.
- The merchant is notified about the transaction status based on the received status.
- Later the customers are informed about the same.
- Once the transaction is approved, funds are asked by the issuing bank by the acquiring bank.
- The default payment consolidator settles funds in merchant accounts based on billing cycles.
What are the key features of a payment aggregator?
- Secure payment processing
- Multiple payment options
- Payment tracking and reporting.
- Fraud detection and prevention
- Integration with other systems
