The Reserve Bank of India’s Payment Aggregator Rules 2025 reset the compliance architecture of digital payments. This ABC Live explainer unpacks the new escrow safeguards, merchant due diligence, cross-border provisions, and compares India’s model with EU, UK, Singapore, UAE, and US frameworks.
Mumbai (ABC Live): The Reserve Bank of India (RBI) has issued its Master Directions on the Regulation of Payment Aggregators (PAs), 2025, consolidating all earlier rules — including the 2020 framework for online PAs and the 2023 directions for cross-border PAs — into one comprehensive regulatory code.
As India’s digital economy expands, payment aggregators are now critical intermediaries handling billions of transactions across e-commerce, in-store retail, and international trade. The 2025 Directions strengthen authorisation norms, merchant due diligence, and escrow account management to ensure fund safety, consumer protection, and regulatory clarity.
Why ABC Live is Publishing This Report Now
The 2025 Directions take effect immediately and will shape how Indians pay online, in-store, and across borders. Payment Aggregators are no longer niche players; they are the plumbing of India’s fintech ecosystem. By consolidating and resetting compliance, RBI has signalled a turning point in digital payments regulation.
ABC Live believes this is the right moment to publish because the Directions affect every link in the payments chain — from a consumer paying at checkout, to a merchant receiving settlement, to a startup seeking PA authorisation. Explaining their impact now ensures that stakeholders understand the rules before compliance gaps emerge.
How This Report is Unique Compared to Mainstream Coverage
Unlike brief headline summaries, this ABC Live explainer goes beyond the circular’s text:
- Systemic Context – We connect the 2025 Directions back to the 2020 PA guidelines and the 2023 cross-border circular, situating them in RBI’s Payments Vision 2025.
- Global Benchmarking – We compare India’s escrow-heavy model with EU PSD2, UK PSRs, Singapore’s PSA, UAE’s payment regulations, and the US MSB regime.
- Stakeholder Impacts – We spell out implications separately for aggregators, banks, merchants, and consumers.
- Critical Gaps – We highlight what may still create friction: MSME onboarding costs, escrow rigidity for marketplaces, and forex compliance for cross-border PAs.
- Reader Utility – We include a mini FAQ, compliance takeaways, and an editorial note to turn regulation into actionable guidance.
Key Takeaways from the 2025 Directions
- Every non-bank PA must get RBI authorisation under the Payment and Settlement Systems Act, 2007. Banks acting as PAs don’t need a separate licence.
- Escrow safeguards strengthened – money collected by PAs must be held in escrow, with strict timelines for settlement and clear rules for credits/debits.
- Merchant due diligence tightened – higher KYC/AML standards, especially for “sensitive” categories like gaming or cross-border services.
- Cross-border transactions are regulated – exporters/importers using PA platforms must comply with new forex documentation and reporting.
- Capital buffers enforced – most PAs must maintain a net worth of ?25 crore after ramp-up.
Global Comparison: How India’s PA Rules Stack Up
India’s 2025 Master Directions bring all types of PAs — online, proximity (face-to-face), and cross-border — under one roof. To understand their significance, it helps to compare them with global frameworks.
Snapshot Table
| Jurisdiction | Who Needs a Licence? | Fund Safety Rules | Authentication | Cross-Border Coverage | Merchant Due Diligence |
|---|---|---|---|---|---|
| India (RBI 2025) | Non-bank PAs (online, proximity, cross-border) under the PSS Act | Escrow accounts with strict debit/credit controls & settlement timelines | Risk-based; no PSD2-style SCA | Explicit PA-Cross-Border framework | Enhanced KYC/AML, high-risk merchant scrutiny |
| EU (PSD2) | Payment institutions offering acquiring services | Safeguarding via segregation/insurance | Strong Customer Authentication (SCA) is mandatory | Harmonised across SEPA/EEA | AML/KYC under EU AML Directives |
| UK (PSRs 2017 + FCA) | Payment institutions & EMIs (acquiring included) | Safeguarding, tightened rules from 2026 | PSD2 SCA on-shored into UK law | Cross-border permissions post-Brexit vary | AML/KYC under FCA rules |
| Singapore (PSA 2019) | Merchant acquisition is a licensable service | Float safeguarding + MAS TRM standards | Tech-risk controls, no PSD2-style SCA | Cross-border transfers are separately licensed | AML/CFT via MAS notices |
| UAE (CBUAE RPSCS, 2021) | Merchant acquiring/aggregation is regulated | Safeguarding requirements per licence type | Scheme/acquirer fraud controls | Domestic + cross-border remittance covered | AML/CFT compliance under CBUAE |
| US (Federal + States) | No single PA licence; MSB + 50-state licences | State-specific, no uniform escrow mandate | MFA depends on banks/networks | MSB registration covers remittance; state rules vary | AML under FinCEN + state laws |
India stands out for its escrow-centric fund safety and single unified code, unlike the fragmented US model or the flexible safeguarding in the EU/UK.
Mini-FAQ
- What’s a Payment Aggregator?
An entity that collects payments on behalf of merchants and settles them later. Unlike gateways, they actually handle funds. - Does this cover cash-on-delivery?
Yes. The new “proximity PA” category covers face-to-face and delivery-against-payment flows. - What about cross-border payments?
Rules for PA-Cross Border are now part of the Master Direction, with added compliance for forex reporting.
Editor’s Note (ABC Live)
This consolidation comes just as India tightens fintech licensing and compliance. The bigger questions ahead are:
- Will RBI introduce PSD2-style strong customer authentication, reshaping checkout UX?
- How will escrow flexibility evolve for marketplaces and delivery-against-payment models, which are vital for MSMEs?
ABC Live will continue to track these developments, separating signal from noise and ensuring that readers — from policymakers to consumers — understand not just what RBI has said, but how it will reshape India’s payment future.
Sources & References
- RBI Master Directions on Payment Aggregators (2025)
- RBI Circular on Cross-Border PAs, 2023
- RBI Guidelines on Payment Aggregators and Gateways, 2020
- Payment and Settlement Systems Act, 2007
- EU PSD2 – European Commission
- UK Payment Services Regulations 2017 – FCA
- Singapore Payment Services Act, 2019 – MAS
- UAE CBUAE Retail Payment Services & Card Schemes Regulation, 2021
- US FinCEN – MSB Registration Rules
