Regulation of Payment Aggregators – Cross Border (PA-Cross Border)
Introduction
The Reserve Bank of India (RBI) has issued circulars to regulate payment aggregators and payment gateways. These circulars include guidelines on the regulation of payment aggregators and payment gateways dated March 17, 2020, and March 31, 2021, as well as circulars on the processing and settlement of export and import-related receipts facilitated by online payment gateways.
Furthermore, specific approval has been given by the RBI to banks for their collection agent arrangements for cross-border payment transactions. In light of developments in cross-border payments, the RBI has decided to bring all entities facilitating cross-border payment transactions for imports and exports under direct regulation. These entities will be referred to as Payment Aggregator-Cross Border (PA-CB). This circular provides details on the regulation of PA-CBs.
Authorization and Compliance
All entities, including authorized dealer (AD) banks, payment aggregators (PAs), and PAs-CB, involved in processing and settling cross-border payment transactions for imports and exports must comply with the instructions outlined in this circular, which may be updated from time to time. These instructions are issued under the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), and the Foreign Exchange Management Act, 1999 (42 of 1999). They are without prejudice to any other permissions or approvals required under other laws.
Definition of PA-CB
PA-CBs are entities that facilitate cross-border
payment transactions for imports and exports. This includes aggregating, processing, and settling of such transactions. These entities may operate as intermediaries, payment gateways, technology service providers, or in any other form that enables cross-border transactions.
Regulation and Requirements for PA-CB
- Authorization: Entities wishing to operate as PA-CBs must obtain specific authorization from the RBI. The application process for authorization will be communicated by the RBI separately. PA-CBs must strictly adhere to the terms and conditions specified in the authorization.
- Compliance with RBI Regulations: PA-CBs must comply with the provisions of the Payment and Settlement Systems Act, 2007 and the Foreign Exchange Management Act, 1999, along with any other regulations or guidelines issued by the RBI from time to time.
- Reporting Requirements: PA-CBs must submit regular reports to the RBI as per the reporting formats prescribed by the RBI. These reports should provide details of the cross-border transactions facilitated by the PA-CBs.
- Customer Grievance Redressal: PA-CBs must have a robust customer grievance redressal mechanism in place. They should provide customers with a dedicated grievance redressal officer and a complaint resolution system.
- Audit and Inspection: PA-CBs may be subject to audit and inspection by the RBI or authorized agencies to ensure compliance with regulatory requirements. PA-CBs must cooperate fully during such audits and inspections.
- Security Standards: PA-CBs must implement robust security measures to safeguard customer data and transaction information. They should follow industry best practices and comply with the RBI’s guidelines on information security.
Additionally, it is important for users and businesses to ensure that they choose a PA-CB that is authorized by the RBI and complies with all regulatory requirements. This will help to ensure the security and reliability of cross-border payment transactions.
It is also recommended that users and businesses follow safe practices when engaging in cross-border payments. This includes verifying the identity of the recipient, checking the accuracy of payment details, and avoiding sharing sensitive information with unauthorized persons or entities.
In case of any concerns or grievances related to cross-border payment transactions facilitated by a PA-CB, users and businesses can reach out to the dedicated grievance redressal officer of the PA-CB, or to the RBI’s grievance redressal mechanism. Prompt reporting of any suspicious transactions can help to prevent financial fraud and mitigate potential losses.
Overall, the regulation of PA-CBs is a crucial step towards improving the safety, efficiency, and transparency of cross-border payments in India. As a user assistant, I strongly advise users and businesses to familiarize themselves with the regulatory requirements and best practices for cross-border payments, and to exercise caution when engaging in such transactions.
Conclusion
The regulation of Payment Aggregators – Cross Border (PA-CB) is aimed at ensuring the smooth and secure facilitation of cross-border payment transactions for imports and exports. Entities wishing to operate as PA-CBs must obtain specific authorization from the RBI and comply with all regulatory requirements outlined in the circular. By doing so, PA-CBs can contribute to the stability and efficiency of cross-border payments in India. For more detailed information, you can refer to the circulars issued by the RBI on this matter.
Disclaimer:
Estabizz Fintech compiled the material in this article using the most recent Acts, Rules, Circulars, Notifications, Provisions, Press Releases, and material applicable at the time. They ensured the completeness and correctness of the material through due diligence. When using this material, users must consult the relevant, applicable legislation. The given data may change without prior notice and does not constitute professional advice. Estabizz Fintech disclaims all liability for any results from the use of this material.
