PoS machines, offline payment aggregators to come under RBI regulatory zone

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With an eye on bringing every element in digital payments chains under strict regulatory ambit, the Reserve Bank is about to apply tight norms on digital payment companies offering merchant payment through PoS terminals,  The Economic Times reported. The specific objective is to implement strict Know Your Customer (KYC) requirements and capitalisation norms.

Officials have claimed that the move would put companies such as Pine Labs, Innoviti Payments, Ezetap and MSwipe in the regulatory zone. These companies provide QR code terminals at offline merchants, PoS terminals and mobile payment terminals.

The prominent players in the QR code arena are Google Pay, Paytm, PhonePe and BharatPe.

Experts in the field say that in order to formulate the rules for offline players, the central bank might adopt the framework applicable to payment aggregators and payment gateways. Quoting a banker who is aware of the developments, the report said that RBI is in the final laps of approving licences for payment aggregators and payment gateways and once that is done, it would focus on the offline sector.

Online payment aggregators are entities that facilitate online payment. They operate as intermediaries between a merchant and its customers. Payment aggregators collect funds from customers and credit them to merchants periodically.

The logic of the RBI to bring offline payment aggregators under the purview of regulations is to bring synergy in regulation between the online and offline players. The guidelines for regulating payment aggregators was introduced in March 2020.

The report also quoted start-up players who claimed that there has been no consultation with the stakeholders on this topic so far. However, they shortly expect a discussion paper on the subject by the RBI.

For the online players, the central bank has stipulated that a networth floor of Rs 25 crore has to be maintained for payment aggregators. However, no such figure has been mentioned for offline players so far.

It appears that RBI would also come up with strict KYC norms for the entities in the offline sector which would enjoin tight background verification.

Sources indicated that the offline players are already under close monitoring and watch of partner banks and card entities such as Visa and Mastercard. Therefore, regulating them might be easier than the online players.