RBI's payment aggregator rules, explained for merchants
In September 2025 the RBI brought all its payment aggregator rules into one Master Direction. Here is what it means for the businesses that use them.
Key takeaways
- In September 2025, the RBI brought every payment aggregator rule issued since 2020 into one set of Directions.
- Non-bank payment aggregators need RBI authorisation, so check your provider is on the RBI's authorised list.
- Customer payments sit in a bank escrow account, which protects merchants if the aggregator runs into trouble.
- Keep your KYC current: incomplete KYC is one of the most common reasons for held settlements.
If you collect payments online or at a counter through a company like Razorpay, Cashfree, PayU or SabPaisa, you are using a payment aggregator (PA). In September 2025 the Reserve Bank of India issued the Regulation of Payment Aggregators Directions, 2025, which brought together every PA rule issued since 2020 into one framework.
Most merchants never read these rules. They should know what they mean, because they decide how quickly you get your money, what documents you are asked for, and how safe your funds are while in transit.
1. Your payment partner must be authorised by RBI
Non-bank payment aggregators need explicit authorisation from the RBI. Before you sign up, check that your provider is on the RBI’s list of authorised payment aggregators (or is in the approval process). This is the single most important question to ask.
2. KYC is not a formality any more
PAs must do proper KYC and due diligence on every merchant, in line with RBI’s KYC directions. Expect to share business registration, PAN, bank account proof, website or store details and beneficial owner information. Existing merchants have also been asked to complete updated KYC. If your PA asks for documents, respond quickly: incomplete KYC is now one of the most common reasons for held settlements.
3. Your money sits in an escrow account
Customer payments collected by a non-bank PA go into an escrow account with a bank, not into the PA’s own account. Money can leave escrow only for permitted purposes such as settling merchants and processing refunds. This protects you if the PA runs into trouble.
4. Settlement has to be time-bound
The rules require PAs to settle funds to merchants within defined time limits. When you compare providers, look at the actual settlement cycle they offer you (T+1, T+2 or instant) and what it costs.
5. Card data stays protected
PAs and merchants cannot store full card numbers. That is why cards are tokenised today and you see saved cards as tokens. If any vendor asks you to store raw card details, walk away.
What this means for you
A regulated payment partner is slower to onboard you and safer to stay with. That trade-off is worth it.
- Choose authorised partners only, and keep a copy of your agreement and rate card.
- Keep your KYC current. Update the PA when your bank account, directors or business address change.
- Ask about settlement, refunds and chargebacks before you sign, not after a dispute.
- Read your monthly statement. Reconcile settlements against orders every week.
I spent years building banking and enterprise partnerships for payment companies. If you’d like a second opinion on a payment partner or contract, send me a note.
Source: Reserve Bank of India, Regulation of Payment Aggregators Directions, 2025 (15 September 2025). This article is a simplified summary, not legal advice. Check the RBI’s website for the full text and the latest list of authorised payment aggregators.
FAQ
Frequently asked questions
What is a payment aggregator?
A payment aggregator is a company that collects payments for merchants online or at a counter, such as Razorpay, Cashfree, PayU or SabPaisa. In September 2025, the Reserve Bank of India issued the Regulation of Payment Aggregators Directions, 2025, which brought every payment aggregator rule issued since 2020 into one framework. These rules decide how quickly merchants get paid and how safe their funds are.
How do I check if my payment aggregator is authorised by RBI?
Check that your provider is on the RBI's list of authorised payment aggregators, or is in the approval process, before you sign up. Non-bank payment aggregators need explicit authorisation from the RBI, so this is the single most important question to ask. Once you sign with an authorised partner, keep a copy of your agreement and rate card.
Why is my payment aggregator holding my settlement?
Incomplete KYC is now one of the most common reasons for held settlements. Payment aggregators must do proper KYC and due diligence on every merchant, so expect to share business registration, PAN, bank account proof, website or store details and beneficial owner information. Respond quickly when asked for documents, and update your provider when your bank account, directors or business address change.