RBI’s approach to PA licenses has lessons for fintechs

In being highly selective about granting payment aggregator permits, the central bank signals that it will settle for nothing less than an impeccable track record.

A little over a week ago, the Reserve Bank of India announced that it was planning to extend the payment aggregator/gateway licensing norms—usually called the PA/PG rules—to offline payment aggregators. In other words, firms that acquire merchants through physical card payment terminals (Pine Labs) or QR codes (Paytm) would also need to be authorized by the RBI if they are to carry on their operations or set up a new business.

This pertains to the guidelines that the central bank had introduced in March 2020 to regulate payment aggregators and payment gateways. A payment aggregator under the RBI’s rules is …