The rise of electronic transactions has led to the increase in demand for the payment gateway license. The procedure to obtain this license to become a payment aggregator is complicated, to say the least, but more complicated are the legal requirements that the licensee has to comply with.
There are many eligibility criteria, authorization conditions, and governing terms that the applicant has to keep in mind while running a payment aggregator business. The traditional way that RBI laid down these conditions makes them not so understandable.
Therefore, through this blog, we are decoding the governing conditions for you. Here, you’ll know the right way to govern your payment gateway in India.
Condition 1: You must professionally manage the payment gateway
The RBI only issues the payment gateway license if it is certain that you have the technical capabilities to run such a business. Furthermore, the directors of the licensee company must meet the following governing conditions:
- All the directors must meet the Fit and Proper Criteria. It means that the court must deem these directors mentally sound to deal with the intricacies of running a payment gateway in India.
- Once the court deems these directors and your company’s management Fit and Proper, they must submit a self-declaration to the Reserve Bank of India to prove the same.
- In case you fail to meet any eligibility criterion, and the RBI finds out about it later, it will cancel your payment gateway license.
Without adherence to these conditions, the Reserve Bank of India won’t consider you a good applicant. Thus, it would refuse to entertain your application to establish a payment gateway.
Condition 2: Communicate any change that happens in your payment gateway company
Reserve Bank of India issues your company the payment gateway license to operate as a payment aggregator. Therefore, if there are any changes within your organization including acquisition, takeover, or transformation of management, you must inform the RBI of those changes within 15 days. The way to provide the information is quite simple. All you need to do is draft a declaration stating those changes submit it to the Department of Payment and Settlement Systems (DPSS), Central office, RBI, Mumbai.
In case you forget to intimate the RBI of any changes within your payment gateway company, it would impact your compliances. In the long run, it would create discord between what you provide and what you tell the RBI. Thus, to ensure that RBI sees you as a payment gateway provider who has integrity, you must always update RBI of any changes that happen within your company.
Condition 3: All the agreements should specify all the responsibilities of all the parties involved
The Agreements that you draft and sign with other parties should contain all the roles and responsibilities including :
- Sorting and handling complaints
- Procedure to follow during failed and incomplete transactions
- Return policy
- Addressing customer grievances.
- Dispute Resolution
- Reconciliation
- Or any particular activity pertaining to your role as a holder of a payment gateway license in India.
Condition 4: Disclose all the important information on the website
Your customers must have access to all the information pertaining to all the policies. They include merchant policies, privacy policy, customer grievances, and other terms and conditions of your payment gateway. Thus, as a holder of the RBI payment gateway license, we can’t assert it enough that you need to provide all that information your official website.
If you don’t provide the information important to your customer, your audience will suffer. As a result, it would leave a bad impression on your company when it comes to compliance. It will in turn make RBI doubt about issuing you the payment gateway license in the first place.
Condition 5: Have a policy in place to address complaints
You must handle all the complaints and disputes that you face in a regulated manner. Therefore, have the following board-approved policies in place:
- Customer complaints policy
- Dispute resolution policy
- Timelines for processing the refunds.
When drafting the above policies, make sure that you keep[ the RBI’s Turnaround Time instructions into account.
You must ensure that all the policies that you draft strictly follow the code of conduct of RBI. Without that aspect, RBI would consider your policies null and void. It would negatively impact your image as a Payment aggregator.
Condition 6: Appoint a Nodal officer
Your payment aggregator company must have a Nodal officer responsible for handling the regulatory needs and customer grievances. Furthermore, the website should contain a page containing information pertaining to the said Nodal officer and his responsibilities.
Conclusion
The way that you conduct your payment aggregator business hinges on your understanding of the RBI regulations.
Through this article, we have tried to make sense of those terms and conditions and made them palatable for your understanding.
Hopefully, when you start operation, you keep these governing regulations in mind so that you can have a long and prosperous business.
