The Reserve Bank of India (RBI) is rolling out new rules for companies that manage point-of-sale (POS) payments. These companies facilitate card swipes or phone payments at stores, making cashless transactions easy. RBI aims to ensure fairness and security in its operations.
After issuing guidelines for online payment aggregators such as Razorpay and Cashfree, RBI has now released draft rules to regulate point-of-sale payment service providers (PA-P). This move brings companies like Innoviti Payments, Pine Labs, and MSwipe under regulatory scrutiny. In essence, these draft rules signify that companies facilitating point-of-sale payments will now operate under RBI’s oversight to maintain standards of fairness and security.
Reserve Bank of India Sets Deadline for Authorization
The new draft rules say that companies offering this service must get permission from the RBI by May 31, 2025. If they don’t get permission, they must stop offering these services.
Payment aggregators must tell the regulator within 60 days of the guidelines coming out if they plan to get permission. Banks must stop working with payment service providers who aren’t banks by October 31, 2025, unless they show they’ve applied for permission from the central bank. The RBI is now telling online payment companies to monitor what merchants are doing on their platforms and ensure they follow the new rules. This means more careful checking of transactions in the industry.
Reserve Bank of India’s New Rules for POS Payments
- Companies handling POS payments need special permission from the RBI by May 2025 to meet regulatory standards.
- If they don’t get this authorization, they’ll have to stop offering these services, according to the draft rules.
- When applying for RBI authorization, these companies must have a minimum net worth of Rs 15 crore and Rs 25 crore by March 2028.
- RBI aims to tighten security to prevent fraud and hacking during POS transactions, requiring companies to join the Financial Intelligence Unit to report suspicious transactions.
- To ensure fairness, these guidelines apply to both POS payment service providers (PA-P) and online payment aggregators (PA-O).
- RBI wants all POS companies to follow the same rules, ensuring a level playing field.
- The goal is to keep your money safe and ensure that POS payments remain reliable for everyone.
Requirements for Existing and New Companies Offering In-Store Card Payments
Existing Companies:
- Existing companies currently providing in-store card payment services (PA-Ps) must adhere to the new guidelines within three months of announcing the final rules.
- These guidelines cover various areas, including managing customer complaints, merchant onboarding processes, and fraud prevention measures.
Net Worth Requirements:
- Existing PA-Ps must have a minimum net worth of at least Rs 15 crore.
- By March 2028, existing and new PA-Ps must have a minimum net worth of Rs 25 crore.
New Companies:
- To apply for RBI approval, new companies wishing to offer in-store card payment services (PA-Ps) must also have a minimum net worth of Rs 15 crore.
- Within three years of receiving approval, they must increase their net worth to Rs 25 crore and maintain it thereafter.
Reserve Bank of India on Non-Compliant Payment Service Providers
New regulations set by the Reserve Bank of India (RBI) are reshaping the landscape of in-store card payment services. Existing payment service providers (PA-Ps) must adhere to stringent net worth requirements and apply for RBI approval by July 2025. Failure to comply will result in the cessation of in-store card payment services. Additionally, banks will close accounts associated with non-compliant PA-Ps by October 2025 unless proof of RBI application is provided.
These changes come amidst the booming Indian digital payments sector, with the RBI aiming to safeguard consumers from fraudulent activities, bolster trust in digital payment methods, and promote fair competition among POS payment service providers. Recent authorizations, such as Infibeam Avenues and Amazon Pay, highlight the evolving landscape, with new entrants like Policybazaar’s PB Fintech also eyeing a foray into payment aggregation, signaling a dynamic and competitive market ahead.
Also Read:
Patanjali Misleading Ads Case: Supreme Court Directs Ramdev and Balkrishna to Issue Public Statement
Nalin Negi Becomes New BharatPe CEO After Suhail Sameer Steps Down
