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PAYMENT AGGREGATOR - ECONOMY
News:
Zomato, Stripe secure
final RBI nod for online payment aggregator
What's
in the news?
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Food-delivery platform Zomato and international financial
infrastructure provider Stripe are
the latest entities to have received final approval from the regulator to
operate as online payment aggregators.
Key
takeaways:
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With the latest additions, 11 entities have now obtained the
regulator’s final nod to operate as online aggregators in the country.
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In December last year, the RBI gave
payment gateways Razorpay and Cashfree
final approval to operate as payment aggregators, paving the way for them to
onboard new merchants, after a year-long embargo.
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Around the same time, payments major Google Pay, expense management platform Enkash and neo-banking startup Open
Financial also received the regulator’s nod.
Payment
Aggregator (PA):
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A Payment Aggregator (also known as a merchant aggregator) is a third-party service provider that allows merchants to accept payment
from customers by integrating it into their websites or apps.
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It bridges the gap between merchants and
acquirers.
Features:
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A Payment Aggregator in India is
incorporated under the Companies Act
2013.
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It can be a bank or a non-bank entity.
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Since a PA handles funds, it requires a license from the RBI.
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Only non-bank payment aggregators require unique authorization from RBI as
‘handling funds’ is considered a part of the normal banking relationships for
bank PAs.
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Examples:
Amazon (Pay) India, Google India, Razorpay, Pine Labs, etc.
Functions
of Payment Aggregators:
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It facilitates
different types of payment transactions, including cash/cheque, online
payments through multiple payment sources, or offline touchpoints.
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It allows
merchants to accept bank transfers without setting up a bank-based merchant
account. It means a merchant need not have a merchant account directly with the
bank.
Go
back to basics:
Payment
Gateway:
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It is a software service that connects your bank account to the platform where
you need to transfer your money.
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It authorizes you to conduct an online transaction
through different payment modes like net banking, credit card, debit card, UPI,
or other online wallets.
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A Payment gateway plays the role of a
third party that securely transfers your money from the bank account to the
merchant’s payment portal.
Difference
between Payment Aggregator v/s Payment Gateway:
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A payment gateway is a software that allows online
transactions to take place, while a payment aggregator is the inclusion of all these payment gateways.
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A payment gateway is an intermediary, while the payment
aggregator is the interface where
the payment gateway processes the transactions.
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Most payment aggregators own payment
gateways to offer various exclusive services to their merchant customers.