In March 2020, the Reserve Bank of India (RBI) issued the guidelines to regulate the activities of the domestic payment aggregators (Domestic PA Framework)[1] and mandated the payment aggregators (PAs)[2] to seek authorisation from the RBI for their payment aggregation business.However, the Domestic PA Framework did not apply to the cross-border payments for import-export transactions.

With the rapid development in e-commerce space in the last few years, resulting in an increase in cross-border payments for import-export transactions, the RBI decided to bring the activities of cross-border payment aggregators under its direct regulation and issued a framework on 31 October 2023[3] to regulate the activities of the entities facilitating cross-border payment transactions for import and export of goods and services (PA-CB Framework).

We have set out herein below a summary of the key provisions of the PA-CB Framework:

Applicability of the PA-CB Framework

 The PA-CB Framework applies to the entities facilitating cross-border payment transactions for import and export of permissible goods and services in online mode (PA-CBs). Thus, the entities, including AD-banks, PAs and PA-CBs, involved in processing and settlement of cross-border payment transactions for import-export of goods and services, shall comply with the PA-CB Framework.

Approval or Authorization from the RBI

    1. The PAs who have either RBI authorisation or applied to the RBI for an authorisation pursuant to the Domestic PA Framework and are engaged in the PA-CB activities would need to (i) intimate the RBI on or before 30 December 2023 as to whether or not such PA wishes to continue with the PA-CB activities, and (ii) seek RBI approval in case such PA decides to continue with the PA-CB activities.
    2. An authorised PA or PA-CB would not require a separate authorisation under the PA-CB Framework or Domestic PA Framework for undertaking PA-CB activities or domestic PA activities, as the case may be. However, such entities would simply seek approval from the RBI to commence PA-CB or PA activities, as the case may be.
    3. Non-bank (and non-PA) entities engaged in PA-CB activities (Non-Bank PA-CB) as on 31 October 2023 (i) would need to apply to the RBI latest by 30 April 2024 for an authorisation. However, such entities can continue to provide PA-CB services until they receive communication from the RBI on their applications.
    4. The existing Non-Bank PA-CB would need to wind-up their PA-CB activities by 31 July 2024 if such entity fails to apply to the RBI for the authorisation on or before 30 April 2024. Further, if an existing Non-bank PA-CB does not submit to the banks the evidence of application for RBI authorisation by 31 July 2024, then the banks shall close the accounts of such entities used for PA-CB activities.
    5. A new non-bank entity cannot engage in PA-CB activities unless the RBI has granted authorisation to such entity under the PA-CB Framework.

Net Worth Criteria

    1. Non-Bank PA-CBs (whether existing entity or a new applicant) would need to have a net worth of at least INR 150 million at the time of submitting an application to the RBI for authorisation.
    2. The existing Non-Bank PA-CBs will have to achieve a net worth of INR 250 million by 31 March 2026, while the new applicants will be required to have a net worth of INR 250 million by the end of the third financial year of the grant of authorisation.
    3. Along with the application, the applicant would need to submit an auditor certificate along with the latest audited financial statements evidencing the net worth of INR 150 million. The newly incorporated entities can submit the provisional balance sheet along with the auditor certificate.
    4. If an existing Non-Bank PA-CB is not able to meet the net worth of INR 150 million, then such entity would need to wind up its PA-CB activity by 31 July 2024.

Categories of PA-CB and collection accounts

    1. An entity may seek PA-CB authorisation for (i) Import only PA-CB (Import PA-CB), (ii) Export only PA-CB (Export CB), and (iii) Export-Import PA-CB (Exim PA-CB). RBI approval will be required for any change in category of PA-CB.
    2. An Import PA-CB is required to maintain an import collection account (ICA) which shall be used to transfer payments to foreign merchants.An Export PA-CB is required to maintain an export collection account (ECA). ECA can be denominated in INR and/or in foreign currency. An ECA for each non-INR currency shall be maintained and all export proceeds shall be credited to the relevant currency ECA.An Exim PA-CB shall be required to maintain separate collection accounts -ICA and ECA- for facilitating import and export transactions.
    3. . PA-CB engaged in domestic PA activities will keep ICA/ECA separate from the escrow account.

Other key aspects

    1. For import and export transactions processed by PA-CBs, the maximum transaction value per unit of goods or services sold/purchased is capped at INR 2.5 million.
    2. The Import PA-CB would need to undertake due diligence of buyer in case the per unit goods/services imported exceeds INR 250,000.
    3. The Import PA-CB would need to undertake customer due diligence on directly onboarded overseas merchants, or e-commerce marketplaces or payment aggregation service providers.
    4. The Export PA-CB to undertake customer due diligence of directly onboarded Indian merchants, e-commerce marketplaces or entities providing PA services.
    5. All other instructions issued by the RBI for domestic PAs would apply mutatis mutandis to the PA-CBs.
    6. All non-bank PA-CBs (existing as on 31 October 2023) will have to register themselves with the Financial Intelligence Unit-India (FIU-IND) as a pre-requisite for seeking RBI authorisation.

CL Comments

Prior to the PA-CB Framework, the RBI had adopted a light touch approach for the cross-border payment aggregators, formerly known as online payment gateway service providers (OPGSPs). Such entities were not required to obtain any license or authorisation from the RBI. OPGSPs were simply required to open accounts with the AD-banks to facilitate cross border payments for import/export transactions.

However, with the issuance of the PA-CB Framework, the PA-CBs would not only require RBI authorisation but they would also be required to maintain a net worth of INR 250 million. This might prompt a few entities to scout for equity investment from interested investors.

Additionally, the operations of the PA-CBs shall be deemed to be “designated payment systems” under section 23A of the Payment and Settlement Systems Act, 2007, which will require the PA-CBs to comply with the directions/instructions issued by the RBI to protect the funds of customers.

PA-CBs would also be required to adhere to the guidelines on governance, merchant on-boarding, customer grievance redressal and dispute management framework, baseline technology recommendations, security, fraud prevention and risk management as set forth in the Domestic PA Framework. This will enhance security, efficiency, and transparency in cross-border payment transactions.

There are a few aspects of the PA-CB Framework, which require clarity. For instance, while the Domestic PA Framework provides different set of regulations for the payment aggregators (requiring RBI’s authorisation) and payment gateways (not requiring RBI’s authorisation) based on the nature of their service offerings, the PA-CB Framework does not provide any such different treatment. Also, the draft framework released by the RBI in April 2022, which set out the revised guidelines for Online Export Import Facilitators (OEIF) (known as OPGSP), provided that an OEIF facilitating import transactions would be acting as a payment aggregator and would require RBI’s authorisation, however, an OEIF facilitating export transactions would be acting as payment gateways not requiring any authorisation from the RBI. However, the PA-CB Framework does not have a similar provision. The PA-CB Framework appears to bring within its fold all entities (including payment gateways as well as collection agent arrangement) facilitating cross border payments.

Unlike the Domestic PA Framework which clearly provides that the PA has to be a company incorporated in India, the PA-CB Framework does not deal with the aspect of what should be the constitution of the non-bank PA-CB. The earlier regime as well as the draft OEIF Framework provided that a foreign company desirous to operate as OPGSP would simply need to open a liaison office in India. The PA-CB Framework is silent on whether a foreign entity would need to set up a company in India. Therefore, it appears that the foreign companies having liaison office(s) and operating as OPGSP in India can also apply to the RBI for authorisation under the PA-CB Framework, however, an explicit clarification from the RBI on this aspect would clarify the regulatory position.

Disclaimer: This publication is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to herein. This publication has been prepared for information purposes only and should not be construed as a legal advice. Although reasonable care has been taken to ensure that the information in this publication is true and accurate, such information is provided ‘as is’, without any warranty, express or implied, as to the accuracy or completeness of any such information.

Author: Dinesh Gupta, Partner , Shubham Tandon, Associate


[1] ‘Guidelines on Regulation of Payment Aggregators and Payment Gateways’ dated 17 March 2020 issued by the Reserve Bank of India

[2] PAs are entities that facilitate e-commerce sites and merchants to accept various payment instruments from the customers for completion of their payment obligations without the need for merchants to create a separate payment integration system of their own. PAs facilitate merchants to connect with acquirers. In the process, they receive payments from customers, pool and transfer them on to the merchants after a time period.



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