Digital Payments And Payment Aggregators: A Regulatory History

In recent years, the digital payments space has grabbed eyeballs across India, with the upsurge in the use of debit cards, credit cards and UPI payments. The increase in the use of digital payments can be largely attributed to the increase in access to the internet, e-commerce websites, mobile applications and the pandemic that forced several individuals to shop online, even for basic necessities. This magnified growth in the use of digital payment systems resulted in the Reserve Bank of India (RBI) issuing guidelines to regulate payment aggregators and payment gateways, bringing them under its wing.

Back in 2020, the RBI issued the Guidelines on Regulation of Payment Aggregators and Payment Gateways ("Guidelines") that mandated RBI approval for entities looking to provide payment services to merchants, in accordance with these Guidelines. While the Guidelines do acknowledge that that banks, and well as non-banking entities, handle payment services as part of their