In a meeting with RBI officials one week ago, the digital payments industry voiced concerns about the Reserve Bank of India's draft guidelines for payment aggregators, as per a report by the Economic Times.
This includes requiring complete KYC and prohibiting the direct disbursement of funds to vendors. A payment aggregator is a third-party service provider that facilitates internet payments for consumers and merchants.
Speaking to the Economic Times, a senior executive said that a presentation “around the issues that the new guidelines could bring upon the industry.” The executive further added that the RBI heard those issues and engaged with the stakeholders regarding the queries that they have.
Around forty industry stakeholders reportedly met with members from the Department of Payment and Settlement Systems. The draft guidelines for the same were issued by the regulator on April 16.
The central bank had declared in June 2022 that it will work to improve regulation of offline payment aggregators (PAs) that facilitate in-person or close proximity transactions. With the rapid growth of digital transactions, the central bank came up with updated guidelines for payment aggregators on KYC, merchant due diligence, and escrow account operations
Similarly, the draft guideline also highlighted that regulations on governance, merchant onboarding, customer grievance redressal, dispute management, should be complied with within three months.
While mentioning the problem with regards to mandatory KYC disclosure for small merchants, the founder of a payment aggregator, reportedly said, ““There are street vendors who are using QR codes for payments… If we need to undertake contact point verification of all such merchants, it will be a huge cost and operational challenge.”
The draft guideline by the central bank outlined the importance of KYC for Payment aggregators. It highlighted that KYC should be required for all merchants. This comes after the RBI imposed restrictions on Paytm Payments Bank Limited, PPBL, due to persistent noncompliance with KYC practices.
