The Reserve Bank of India has given fintech company PayU Payments its in-principle license to function as a payment aggregator and add new merchants to its network. With Prosus's support, the company is now able to integrate new merchants and provide them digital payment services.
The objective of the RBI's effort to increase oversight of the payments industry is to improve online transaction accountability and transparency. In addition to providing buy-now-pay-later services, PayU is a payment gateway that rivals companies like Walmart-owned PhonePe and Razorpay, which is sponsored by Tiger Global.
Because of its intricate corporate structure, the RBI rejected the fintech company's application to function as a payment aggregator last year and instructed it to reapply. PayU was forced to stop adding new merchants to its online payment aggregation platform as a result.
Cashfree, Razorpay, and Paytm all faced similar bans. Of which, Paytm is still awaiting permission, while the last two were approved in December of last year.
"This licence is pivotal in our mission to establish a globally renowned digital payment infrastructure rooted in India," stated Anirban Mukherjee, CEO of PayU. We are committed to advancing digitalization and financial inclusion, especially for small merchants, in line with the government's Digital India plan and the RBI's progressive policies.
The RBI aims to reduce the dangers that could arise from digital payments, including fraud, money laundering, and non-compliance with rules. To this end, it has mandated payment processors to keep a close eye on merchant operations on their platforms.
The necessity of thorough due diligence procedures and ongoing merchant transaction monitoring is emphasized by the new standards. It is anticipated that payment companies will put in place strong risk management frameworks, which should include transaction monitoring, know-your-customer (KYC) protocols, and reporting systems.
Protecting consumer interests and upholding the integrity of the digital payments ecosystem are the goals of this proactive strategy. The RBI's directive also supports international initiatives aimed at preventing financial crimes and advancing a safe and open digital financial environment.
The central bank hopes to boost consumer and corporate confidence by tightening compliance rules and strengthening oversight, which would encourage the expansion and uptake of digital payment systems in India.
A payment aggregator simplifies the payment process by combining the payment gateways and merchant accounts of several companies into a single platform. This strategy has many advantages for companies, especially small and medium-sized ones (SMEs). First of all, it gets rid of the necessity for individual companies to go through drawn-out, frequently expensive application procedures with banks and payment processors. Due to the connections that payment aggregators have already made with these organizations, it is simpler for companies to set themselves up to accept electronic payments.
Furthermore, payment aggregators often offer a simple interface that allows firms to manage their payment operations from a single dashboard. This offers functionality such as transaction tracking, report generation, and refund/chargeback processing.
Payment aggregators allow businesses to accept a wide range of payment methods without requiring any upfront labor, whether by credit card, debit card, e-wallet, or bank transfer. PayU provides payment gateway solutions to online businesses, serving a large network of over 450,000 merchants and offering over 100 payment methods.
