Opinion

Passive aggression, payment aggregators



RBI is moving with extra caution in the grant of licences to online payment aggregators. This degree of caution is warranted, given the growth of online payments in the country and in cross-border transactions. The regulations for fintechs present extra complexity for the banking regulator accustomed to dealing with a small number of banks whose ownership, business model, governance standards, fees and customer relations are tightly overseen. The scenario of options for payment aggregators in each of these categories is wider, which makes granting permits a much more laborious endeavour. Especially in a far more fluid environment of technological innovation, which RBI has a mandate to encourage. So, it’ll have to be the baby-bathwater routine.

In-principle clearances have, thus, been relatively easy to come by for startups that were already pooling in customer money for payment to merchants. But embargoes on onboarding new customers were issued as the central bank satisfied itself about the intermediaries involved. Some embargoes have been prolonged, forcing incumbents to seek out alternative business plans as they wait it out for the final permit. In other instances, applications have been turned down, creating hybrid models that bring together customers and licensed payment aggregators. These run counter to the regulatory intent of governing the pooling and settlement of customer money, and the rules may very well evolve on the lines of those for banks about no-go areas.

Some degree of harmonisation would be required to level the playing field between traditional and new-age payment aggregators. Banks have been doing the job for a while now under strict supervision. Nimbler fintechs that want to go up against these giants will have to share some of the compliance burden. By separating payment aggregation and payment gateways, RBI has done its bit to further technological innovation. It is now free to bring full scrutiny of the business case arising out of such technological innovation. Fintechs will have to adapt to this reality.



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