Understanding Payment Aggregator and Cross Border Transactions

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November 4, 2023

Understanding Payment Aggregator and Cross Border Transactions

RBI Regulation: Cross-border payment firms to fall under RBI's regulatory  net - Times of India


  • In the realm of online commerce, Payment Aggregators (PAs) and Cross Border transactions (CB) play pivotal roles in facilitating seamless payment processes. This article provides insights into their functions, regulations, and distinctions.

Payment Aggregator (PA): Streamlining Payment Processes

Definition and Function

  • A Payment Aggregator, also known as a merchant aggregator, is a third-party service provider that enables merchants to accept payments from customers by integrating it into their websites or applications. It streamlines various payment transactions, including cash, cheques, online payments from multiple sources, or offline touchpoints. Notably, a PA allows merchants to accept bank transfers without the necessity of establishing a bank-based merchant account.

Regulatory Framework

  • PAs in India are incorporated under the Companies Act of 2013, and they can be either bank or non-bank entities. However, as PAs handle funds, they mandate a license from the Reserve Bank of India (RBI). It is important to note that only non-bank payment aggregators require unique authorization from the RBI, as handling funds is considered an intrinsic aspect of normal banking relationships for bank-based PAs.


  • Prominent examples of Payment Aggregators in India include Amazon (Pay), Google India, Razorpay, Pine Labs, among others.

Payment Gateway: Enabling Secure Transactions

Definition and Operation

  • A Payment Gateway serves as a software service that connects one’s bank account to the platform where money transfer is required. It grants authorization for online transactions through various payment modes such as net banking, credit card, debit card, UPI, or other online wallets. Acting as a secure intermediary, a Payment Gateway ensures the safe transfer of funds from the payer’s bank account to the merchant’s payment portal.

Payment Aggregator vs. Payment Gateway: Clarifying the Distinction

Role and Functionality

  • While a Payment Gateway is essentially a software facilitating online transactions, a Payment Aggregator encompasses all these payment gateways. In essence, a Payment Aggregator serves as the interface through which payment gateways process transactions. Notably, many payment aggregators possess their own payment gateways, enabling them to offer a range of exclusive services to their merchant clientele.

Cross Border Payment Aggregator (PA-CB): Facilitating Global Transactions

Facilitating Cross-Border Transactions

  • A PA-CB specializes in facilitating cross-border online payments for the import and export of permissible goods and services. The RBI has established a minimum net worth requirement of Rs 15 crore for entities falling under this category, ensuring robust financial stability.

Regulatory Responsibilities

  • Entities classified as PA-CB bear the responsibility of ensuring that they do not facilitate payment transactions for the import of any restricted or prohibited goods and services. Moreover, if the transaction amount exceeds Rs 2.5 lakh, due diligence on the buyer is mandatory.

Conclusion: Empowering E-Commerce through Seamless Payments

  • In the dynamic landscape of online commerce, Payment Aggregators, Payment Gateways, and Cross Border Payment Aggregators play crucial roles in ensuring the smooth flow of financial transactions. Understanding their functions and regulatory frameworks is essential for businesses and consumers alike, as they collectively contribute to the growth and expansion of the digital economy.

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Understanding Payment Aggregator and Cross Border Transactions | Vaid ICS Institute