Payment Gateway Aggregator Solutions

What is a Payment Aggregator (PA)?

A payment aggregator is a third-party service that facilitates payments for customers and enables businesses (merchants) to accept them online.
It acts as a comprehensive payment platform that allows businesses to accept payments through numerous methods, such as:

·         Debit Cards
·         Credit Cards
·         UPI
·         Digital Wallets
·         Bank Transfers
·         Cardless EMIs
·         E-mandates

In India, payment aggregators must obtain a license from the Reserve Bank of India (RBI) to onboard merchants and provide them with the necessary tools and systems to accept and manage digital payments. This function is regulated under the “Guidelines on Regulation of Payment Aggregators and Payment Gateways” (2020), which came into effect on March 31, 2021.

Key Difference: Payment Aggregator vs Payment Gateway
      Aspect                                 Payment Aggregator                                                              Payment Gateway

       Role                          Collects and settles payments on behalf of merchants                  Provides technology to process payments

  License Requirement              Requires regulatory approval/license                                      No direct license required

   Merchant Onboarding              Onboards merchants directly                                               Does not onboard merchants
 
      Fund Handling                       Holds and settles funds                                                       Does not handle funds

  Regulatory Compliance               High (KYC, escrow, audits)                                               Limited compliance

     Examples                             Aggregators managing end-to-end payments                        Technology-only service providers

A payment aggregator manages the entire payment lifecycle, while a payment gateway acts as a technical bridge between customers, merchants, and banks.

Step 1: Merchant Signup & Onboarding

Merchant applies on the aggregator’s platform
Submits KYC, bank details, business documents
Aggregator performs:
Identity verification
Risk & compliance checks
Merchant is approved as a Sub-Merchant
✅ No direct bank integration needed

Step 2: Technical Integration

Aggregator provides:
API keys / SDKs / Plugins
Test (sandbox) environment
Merchant integrates payment checkout on:
Website
Mobile app
Merchant configures payment options (Cards, UPI, NetBanking, Wallets)

Step 3: Customer Initiates Payment

Customer selects product/service
Clicks Pay Now
Aggregator’s payment page loads
Customer selects payment method and enters details

Step 4: Payment Authentication

Aggregator encrypts payment data
Transaction is sent to:
Acquiring bank / UPI processor
Issuing bank validates:
Balance
OTP / 3-D Secure
Fraud rules

Step 5: Authorization Decision

Issuing bank sends:
Approved or Declined
Response flows back to the gateway
Customer sees payment result instantly
⏱ Happens in a few seconds

Step 6: Funds Captured in Aggregator Account

Successful payments are captured
Funds go into the aggregator’s nodal/escrow account
Transaction is logged in merchant dashboard

Step 7: Settlement to Merchant

Aggregator calculates:
MDR (fees)
Taxes
Net amount is transferred to merchant’s bank account
Settlement follows agreed cycle:
T+1 / T+2 / Weekly

Step 8: Post-Transaction Management

Merchant can:
Initiate refunds
View reconciliation reports                               
Track success rates
Aggregator manages:
Chargebacks
Disputes
Fraud monitoring

Step 9: Reporting & Compliance

Daily transaction reports
Settlement statements
Regulatory & audit compliance
PCI-DSS & local regulations handled by aggregator

To obtain a Payment Aggregator License, entities must fulfill strict eligibility requirements as prescribed by regulatory authorities:

1.    Entity Type
The applicant must be a legally registered entity such as:

o    Private Limited Company

o    Public Limited Company

o    Not-for-Profit Company (if permitted)

2.    Minimum Net Worth Requirement
The company must maintain a minimum net worth as prescribed by regulations. This ensures financial stability and the ability to manage settlement risks.

3.    Business Objectives
The company’s Memorandum of Association (MOA) must clearly state payment aggregation and related financial services as its primary business activity.

4.    Capital and Financial Stability
Audited financial statements, capital structure details, and proof of financial soundness are mandatory to demonstrate operational capability.

5.    Technology & Infrastructure
Applicants must have robust IT systems, secure payment architecture, data encryption mechanisms, and disaster recovery plans.

6.    Compliance & Governance

o    Proper KYC and AML policies

o    Grievance redressal mechanism

o    Internal audits and risk management frameworks

o    Data security and customer protection policies

7.    Management & Directors
Directors and key management personnel must be fit and proper, with clean financial and legal records.

8.    Banking & Escrow Arrangement
The applicant must have arrangements for escrow or nodal accounts with authorized banks for fund settlement.

Documents Required for RBI Payment Aggregator License
To obtain a Payment Aggregator (PA) license from the RBI, businesses must submit a set of documents that prove their legal status, financial stability, technical capability, and operational readiness.

1. Corporate Documents
Certificate of Incorporation from the Registrar of Companies (RoC).
Memorandum of Association (MoA) and Articles of Association (AoA).
PAN Card of the company.
Board resolution authorizing the application for the PA license.
Shareholding pattern and details of parent/subsidiary entities, if applicable.
Certificate of Registration with the Financial Intelligence Unit (FIU-IND), if applicable.
2. Director Documents
PAN Card and Aadhaar Card (or valid ID proof) of all directors.
Director Identification Number (DIN).
Passport-size photographs.
Address proof (electricity bill, bank statement, etc.).
Declaration of fit and proper status of directors as per RBI guidelines.
3. Financial Documents
Audited balance sheets for the last three financial years.
Net worth certificate issued by a Chartered Accountant.
Income Tax Returns (ITR) of the company and directors.
Bank account statements.
Details of funding sources and investor agreements (if any).
4. Business Documents
Detailed business plan and revenue model.
List of existing or proposed merchants.
Description of customer grievance redressal mechanism.
Risk management and fraud prevention framework.
Information security and data privacy policy.
5. Technical Documents
System architecture and infrastructure layout.
PCI-DSS certification and other security audit reports.
Business Continuity Plan (BCP) and Disaster Recovery (DR) policy.
Technology partnership agreements (if using third-party platforms).
API documentation and payment flow diagram.
Information Security Policy aligned with RBI’s IT framework circular for PAs (including access controls, VAPT reports, and data localization details).

Types of Payment Aggregators in India
In India, payment aggregators are broadly classified into two types based on who operates them and their regulatory requirements.

1. Bank Payment Aggregators
Bank payment aggregators are operated directly by banks and help businesses accept online payments through multiple payment methods.
Since these are managed by banks, they do not need separate approval from the Reserve Bank of India (RBI) to operate.
However, using a bank payment aggregator usually comes with higher setup costs and complex integration processes.
Large corporations with dedicated tech teams may manage this easily, but startups and small businesses may find it expensive and time-consuming.
Also, bank aggregators often do not offer value-added services like real-time analytics or business dashboards.
2. Third-Party Payment Aggregators
These are non-bank entities that provide payment aggregation services and must be authorised by the RBI to operate.
Third-party aggregators handle all the technical and operational work involved in processing payments from multiple methods (cards, UPI, wallets, etc.).
They are generally more affordable than bank aggregators, with lower setup and annual maintenance costs.
Because they offer easy integration, they are ideal for small and medium businesses.
Additionally, they provide extra services such as sub-merchant onboarding, fraud detection, and analytics dashboards to help businesses track and manage payments efficiently.
As of 2025, Notable RBI-authorised Payment Aggregators include Razorpay, Cashfree, PayU, CCAvenue, Pine Labs, and Instamojo, among others.