In October 2023, the Reserve Bank of India (RBI) introduced a comprehensive framework to regulate entities facilitating cross-border online payment transactions for the import and export of permissible goods and services. These entities are designated as Payment Aggregators – Cross Border (PA-CB).
Categories of PA-CB
The RBI classifies PA-CBs into three distinct categories:
- Export Only PA-CB (PA-CB-E): Entities that exclusively handle export transactions.
- Import Only PA-CB (PA-CB-I): Entities that solely manage import transactions.
- Export and Import PA-CB (PA-CB-E&I): Entities that facilitate both export and import transactions.
Key Requirements and Compliance
To operate as a PA-CB, entities must adhere to several regulatory requirements:
- Authorization: Non-bank entities currently providing PA-CB services are required to apply for RBI authorization by April 30, 2024. New entrants must obtain approval prior to commencing operations.
- Net Worth Criteria: Existing non-bank PA-CBs must have a minimum net worth of ₹15 crore at the time of application, increasing to ₹25 crore by March 31, 2026. New applicants are required to meet the ₹15 crore net worth at application and achieve ₹25 crore by the end of the third financial year post-authorization.
- Collection Accounts: PA-CBs must maintain specific accounts with Authorized Dealer Category-I banks:
- Import Collection Account (ICA): For import transactions.
- Export Collection Account (ECA): For export transactions, with separate accounts for non-INR currencies.
- Customer Due Diligence: PA-CBs are mandated to conduct thorough due diligence in line with the Master Direction – Know Your Customer (KYC) guidelines. For import transactions exceeding ₹2,50,000 per unit, due diligence of the buyer is also required.
- Transaction Limits: The maximum value per unit of goods or services processed by PA-CBs is capped at ₹25,00,000.
Implications for the Industry
The introduction of the PA-CB framework signifies the RBI’s commitment to enhancing the security, transparency, and efficiency of cross-border payment transactions. Entities engaged in such activities must now navigate a more structured regulatory environment, ensuring compliance with stringent guidelines. This move is anticipated to bolster trust in cross-border payments and promote the growth of international trade facilitated by Indian payment aggregators.
As of January 2025, only a select few entities have secured the necessary licenses to operate as PA-CBs, underscoring the rigorous standards set by the RBI.
Entities aiming to operate as PA-CBs must diligently assess their compliance frameworks, financial standing, and operational processes to align with the RBI’s directives, thereby contributing to a robust and secure cross-border payment ecosystem.
