Summary of this article
RBI mandates stricter norms for payment aggregators.
Escrow accounts, merchant vetting, and cross-border limits enforced.
Non-bank aggregators require RBI authorisation by December 31.
The Reserve Bank of India (RBI) has issued the Regulation of Payment Aggregators Directions, 2025, which adds new regulations on compliance for payment facilitators that accept digital payments along with occasional physical transactions through various other channels.
Background To The Directions
Draft guidelines were initially issued on April 16, 2024. RBI then sought feedback from banks, fintech companies, legal advisors, merchants, and even the general public. RBI aimed at verifying everything from aggregators’ definitions, managing escrow accounts, monitoring merchants, and cross-border payments. After the input was checked, RBI finalised the directions on September 15, 2025.
Features Of The Framework
RBI’s master directions presents detailed compliance requirements for Payment Aggregators:
1. Rationalised Definitions: Aggregators have been classified in respective categories, such as small, medium, and large depending on the transaction size and operation level. This eliminates uncertainty, provides uniform regulation for entities, and enables the RBI to specify differentiated compliance requirements depending on size and risk profile.
2. Authorisation Process: Non-bank players will need to have prior approval from RBI for being aggregators. The process includes financial prudence check, governance norms, and operating capabilities. They will have to prove the presence of sufficient capital buffers, sound risk management practices, and capable management staff in order to facilitate safe operations.
3. Escrow Account Regulations: Aggregators should keep funds received from customers in escrow accounts. Escrow accounts ensure that all the funds in customers’ hands, such as prepaid amounts or funds pending to be paid to merchants, are covered in full. Aggregators should keep end-of-day balances according to obligations and inform RBI immediately in case of any shortfall. This helps protect customers’ money and keeps funds as such.
4. Integration of Cross-Border Operations: Aggregators engaged in cross-border operations must adopt the same regulatory monitoring practices as they do for domestic operations. The new master directions integrate prior standalone circulars on cross-border payments, procedural clarifications, reporting requirements, and risk management expectations.
5. Merchant Due Diligence: Aggregators need to implement stringent checks prior to on-boarding any merchant. These include verification of business credentials, ownership, and solvency. After on-boarding, constant monitoring of the transactions carried out by the merchants needs to be done to identify suspicious activity or fraud and lower operational and systemic risk.
6. Capital and Governance Requirements: Aggregators must maintain adequate capital to support operational and financial shock absorption. Dispute resolution policies, refund timelines, and monitoring of merchants must be approved by board of directors. Internal controls, operating governance, fraud detection, and information security systems should be effective to protect robust operations.
7. Reporting Obligations: Aggregators are also required to report escrow balance discrepancies, cases of merchant fraud, or defaults in operation to RBI on an immediate basis. They are required to undergo periodic audits and documentation of compliance. It specifies the timeframes and manner of reporting so that RBI has timely information available to effectively regulate the space of digital payments.
Implementation Of The Rules
The instructions become operational immediately unless otherwise noted. Aggregators already in operation must revert to operations and get into harmony with the master instructions. New entrants will have to comply with the requirements for authorisation right from the start.
Industry Significance
Payment aggregators allow firms to accept payments through different channels, and thus are critical for e-commerce. More transparent definitions, tighter compliance standards, and regularised reporting will ensure increased financial discipline and monitoring within the industry.
Next Steps For Aggregators
As of now, aggregators will need to review escrow activities, merchant boarding requirements, regulatory capital, and reporting. Organisations will need to record compliance and fill the gaps. New entrants will need to anticipate tighter authorisation and ensure financial and governance arrangements are in conformity with the guidelines.
