Cross-border payment aggregator in India www.deekpay.com

Payment aggregation has revolutionised the way businesses accept payments online. With the rise of e-commerce and globalisationCross-border transactionsbecoming increasingly common. In this comprehensive guide, we will explore the concept of payment aggregation specifically in the context of cross-border transactions. We will take an in-depth look at the Indianpayment aggregatorKey aspects, requirements and regulations for cross-border (PA-CB) operations.

What is a payment aggregator?

A payment aggregator is a third-party service provider that enables merchants to accept payments from their customers by integrating payment options into their websites or apps. It simplifies the payment process by integrating different payment sources and methods into one platform for the convenience of businesses and customers.

Payment aggregators facilitate various types of payment transactions, including cash, cheques, online payments through multiple sources or offline touch points. They allow merchants to accept bank transfers without having to integrate directly with a bank, thus eliminating the need for merchants to set up individual merchant accounts at multiple banks.

existIndiaThe payment aggregator is incorporated under the Companies Act, 2013 and can be either a bank or a non-banking entity. However, since non-banking payment aggregators are involved in processing funds, they need to obtainReserve Bank of Indiaof special authorisation. On the other hand, bank payment aggregators are considered to be part of a normal banking relationship and do not require separate authorisation.

Recommended Reading:Reserve Bank of India RBI

Understanding Cross-Border Payment Aggregators (PA-CB)

Cross-border Payment Aggregator (PA-CB) specifically refers to the facilitation of cross-border online payments for goods and services that are permitted to be imported or exported.RBI Certain standards and regulations have been established for entities engaged in PA-CB activities to ensure compliance and accountability.

RBI has categorised PA-CB activities into three broad categories: export-only PA-CB, import-only PA-CB, and export-import PA-CB.Each category has its own specific requirements and guidelines.

Key Requirements for Payment Aggregator Cross Border (PA-CB) Operations

PA-CBs must adhere to specific guidelines and compliance requirements set by RBI. Let's explore some of the key requirements for PA-CB operations:

Net worth requirement: PA-CBs are required to maintain minimum net worth as per RBI regulations. Existing non-banking PA-CBs should have a net worth of at least INR 150 million at the time of applying for authorisation. New non-banking PA-CBs should have a net worth of at least INR 150 million at the time of application and increase it to INR 250 million by the end of the third financial year after authorisation. Import/Export Accounts : PA-CBs engaged in import business only are required to maintain Import Collection Accounts (ICA) with AD Category I Scheduled Commercial Banks. Payments received from customers for import transactions will be deposited in the PA's escrow account and then transferred to the ICA for onward settlement with offshore merchants. Similarly, PA-CBs engaged in export business only are required to maintain an Export Collection Account (ECA) with a scheduled commercial bank in AD Category I. The ECA can be denominated in Indian Rupees (INR) or foreign currency. Customer Due Diligence and KYC: PA-CB is required to conduct Customer Due Diligence and Know Your Customer (KYC) processes for merchants on its platform. This includes onboarding merchants directly, working with e-commerce marketplaces, or partnering with entities that offer PA services abroad. In addition, buyer due diligence is also mandatory for import transactions exceeding INR 2,50,000 per unit. Payment Instruments: PA-CBs can use any payment instrument authorised by RBI to process payments for import/export transactions, except for small prepaid payment instruments (PPIs). Registration with the Financial Intelligence Unit of India (FIU-IND): All non-banking PA-CBs are required to register with the Financial Intelligence Unit of India (FIU-IND) before seeking authorisation from RBI. Foreign Trade Compliance: In line with the prevailing foreign trade policy, PA-CBs must ensure that payment transactions conducted through their platforms do not involve the import or export of restricted or prohibited goods and services. Separate Accounts for Domestic and PA-CB Activities: Entities participating in domestic PA and PA-CB activities must keep their Import Collection Accounts (ICA) and Export Collection Accounts (ECA) separate from escrow accounts used for domestic PA activities. Transaction Limit: PA-CB can process payments for import and export transactions up to INR 25,00,000 per unit of goods or services. These are just some of the key requirements and guidelines for the operation of PA-CB, which must comply with all relevant regulations and guidelines laid down by the Reserve Bank of India to ensure thatCross-border paymentsThe smooth running of the

Benefits and Impact of Cross-Border Payment Aggregators (PA-CB)

PA-CB operations offer a variety of advantages that can significantly impact the ease of cross-border transactions. The following are some of the key advantages and impacts of PA-CB:

Simplified Cross-Border Payments: PA-CB simplifies the complex process of cross-border payments by providing merchants and customers with a unified platform for seamless transactions. Cost-Effective Solution: PA-CB eliminates the need to open individual merchant accounts at multiple banks, thereby reducing the cost of doing business. Enhanced Security: PA-CB prioritises security and compliance by implementing robust security measures and ensuring compliance with KYC and AML regulations. Expanded Market Reach: PA-CB enables merchants to reach global customers by accepting payments in multiple currencies and facilitating cross-border transactions. Efficient Settlement Process: PA-CB provides an efficient settlement process that ensures timely payment transfers between buyers and sellers. Regulatory Compliance: By adhering to the guidelines set by the Reserve Bank of India, PA-CB helps maintain a secure and compliant payments ecosystem. Facilitating International Trade: PA-CB plays a vital role in facilitating international trade by promoting smooth and secure cross-border transactions that benefit both importers and exporters.

The implementation of PA-CB operations has had a significant impact on cross-border transactions, facilitating seamless global trade and improving the overall efficiency of the payment process.

concluding remarks

Payment Aggregator Cross Border (PA-CB) operations have revolutionised the way businesses process cross-border transactions. PA-CB simplifies the complexity of cross-border payment processes by providing merchants and customers with an integrated platform for seamless transactions.

For entities engaged in PA-CB activities, adherence to the regulations and guidelines laid down by the Reserve Bank of India to ensure safe and compliant operations is of paramount importance. From maintaining minimum net worth requirements to conducting customer due diligence and KYC procedures, adherence to these guidelines is essential for the smooth running of PA-CB operations.

PA-CB plays a key role in facilitating international trade, expanding market reach and improving the efficiency of cross-border transactions. By streamlining payment processes and prioritising security, PA-CB contributes to the growth and development of business in global markets.

As cross-border transactions become more prominent, payment aggregators will play an increasingly important role in providing a seamless and secure payment experience for businesses and customers worldwide.

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