In the rapidly evolving digital payment ecosystem of India, Payment Aggregators (PAs) and Payment Gateways (PGs) are the backbone of online transactions. However, this critical role comes with significant regulatory responsibilities. The Reserve Bank of India (RBI) has laid down a comprehensive framework to govern these entities and compliance is not just a formality-it is a mandatory requirement to operate legally. This is where a trusted partner like Praman Advisors Private Limited becomes essential.We offer specialized services to help businesses navigate the intricate world of PAPG compliance, ensuring seamless operations and risk mitigation.
1. Overview:
The RBI's "Guidelines on Regulation of Payment Aggregators and Payment Gateways" are designed to safeguard consumer interests, foster innovation and maintain the integrity of the digital payment infrastructure. The guidelines differentiate between a Payment Aggregator (PA) and a Payment Gateway (PG):-
- Payment Aggregator (PA): An entity that facilitates e-commerce sites and merchants to accept various payment instruments from customers without the need for merchants to create their own payment integration system. PAs handle the funds, collect payments and transfer them to the merchant.
- Payment Gateway (PG): An entity that provides the technology infrastructure to route and process online payment transactions. PGs do not handle funds directly; they are the technological bridge between the customer, merchant and bank.
The core compliance requirements for both PAs and PGs include obtaining an RBI authorization, maintaining a prescribed minimum net worth, adhering to strict data security standards and implementing robust Know Your Customer (KYC) and Anti-Money Laundering (AML) policies.
2. Benefits:
Engaging a specialized consultancy like Praman Advisors offers a strategic advantage for businesses in the digital payments space.
- Expert Navigation: The compliance process is complex and subject to frequent updates. Praman Advisors' team of experts, with a deep understanding of RBI guidelines can guide you through every step from initial application to ongoing reporting.
- Risk Mitigation: Non-compliance of PAPG may lead to severe penalties, revocation of authorization and reputational damage. Praman Advisors ensures all your filings and procedures are accurate and timely, protecting your business from legal and financial risks.
- Operational Efficiency: The application and compliance process is time-consuming. Outsourcing this to professionals allows your team to focus on core business activities, while the experts handle the regulatory heavy lifting.
- Customized Solutions: Praman Advisors understands that every business is unique. We offer tailored solutions that align with your specific business model and operational needs, ensuring a streamlined and effective compliance strategy.
3. Documents Required:
The specific documents can vary but a comprehensive list generally includes:-
- Company Incorporation Documents:
- Certificate of Incorporation (CoI).
- Memorandum of Association (MoA) and Articles of Association (AoA).
- A formal board resolution authorizing the application for the PA/PG license.
- Financial Documents:
- Audited financial statements for the past two years or since incorporation.
- A certificate from a Chartered Accountant (CA) verifying the company’s net worth.
- A detailed five-year business plan.
- Director and Shareholder Documents:
- Permanent Account Number (PAN) and Address Proof of all directors.
- Director Identification Number (DIN) and Digital Signature Certificate (DSC) of all directors.
- Detailed ownership and shareholding structure of the company.
- Technical and Operational Documents:
- A report on the company's IT infrastructure and security measures.
- Compliance and Anti-Money Laundering (AML) policies.
- Details of the company's bank account.
- Code testing reports from a software agency.
- Cybersecurity audit reports (VAPT etc.).
- Other Agreements:
- Any existing partnership or service agreements with banks or other financial institutions.
4. Process to Apply:
The process for obtaining and maintaining PAPG compliance through Praman Advisors is methodical and efficient:-
- Initial Assessment & Consultation: Our team of experts conducts a thorough review of your business model to determine your eligibility and the specific requirements under the RBI guidelines.
- Document Compilation & Verification: Our team assists in gathering, reviewing and preparing all the necessary legal, financial and technical documents.
- Application Filing: The application for RBI authorization is meticulously prepared and filed on your behalf through the designated channels.
- Liaison & Follow-up: Praman Advisors acts as a liaison with the RBI, responding to any queries or requests for additional information and proactively tracking the status of your application.
- Post-Authorization Compliance: Once the authorization is granted, We continue to provide support for ongoing compliance including annual audits, regular reporting and adherence to security standards.
5. Fees and Timelines:
The fees for PAPG compliance services are a function of the complexity of the application and the scope of work. Praman Advisors provides transparent and competitive pricing, which is best discussed through a direct consultation.
Manju Laur: 📞 +97119 94042
The RBI application review itself can take 06-09 months and meeting the initial and ongoing net worth requirements is a crucial factor. Key timelines to be aware of include:-
- Net Worth: Existing PAs were required to maintain a net worth of ₹15 Crore by March 2021 and ₹25 Crore by March 2023. This ₹25 Crore net worth must be maintained at all times.
- Audit Reports: Entities must submit various reports including annual and quarterly audit reports to the RBI to demonstrate continued compliance.
