Overview

Are you a passionate entrepreneur or business owner aiming to expand your digital presence and accept online payments? If yes, you are at the right place.

Payment Gateway License is a permit/certification granted for the transfer of transaction information to acquiring banks and responses from issuing banks. The application for the grant of a certificate of authorization must be made to the Reserve Bank of India (i.e., RBI) under section 5 of the PSS Act (Payment and Settlement Systems Act), 2007.

In simple terms, the issuance of an RBI payment gateway license ensures the establishment of a payment gateway system that facilitates electronic transfer between customers and sellers. Also, consistent growth has been observed in the payment gateway landscape since the inception of the digital payment system in India.

Unsure about meeting RBI’s payment gateway standards? Our seasoned professionals at Fastzeal will guide you through every compliance requirement for seamless licensing.

Benefits of Obtaining a Payment Gateway License in India

Have a look over the key benefits of obtaining a payment gateway license in India:

• PCI-DSS Wallet: Compliance with PCI-DSS Wallet provides security to application users by securing their personal data in the portal or gateway for recurring payments.

• White-Label Wallet: Some payment gateways permit customers to make digital transactions from mobile wallet applications for all their operations and transactions.

• Fraud Screening Tools: Payment gateways provide Fraud Screening Tools (FST) like Card Code Value, Address Verification Service, and Card Verification Value to reduce the risk of losing personal data.

• One-Stop Solution: Payment gateways integrate multiple digital commerce platforms, shopping carts, and different software systems into a single application programming interface.

• Multiple Payment Options: Allows businesses to process multiple payment methods like credit/debit cards, digital wallets, and net banking, enhancing customer satisfaction.

• Market Expansion Opportunities: The RBI payment gateway license facilitates international payment processing, helping businesses expand beyond local borders.

  
  

  
  

Eligibility Criteria for Obtaining Payment Gateway License

The applicants must comply with the following eligibility criteria to obtain a payment gateway license in India:

• Company Registered under the Companies Act, 1956/2013

• Minimum 2 Members

• Minimum 2 Directors

• Address Proof of the Business

• 5 Years’ Business Plan

• Current Bank Account of the Company

• System Flow & Code Testing Report by a Software Certifying Agency

• Service Tax Registration Number

• Compliance with Payment Card Industry Data Security Standard (PCI DSS)

• Net Worth requirement of at least Rs. 15 crores

• Net worth of up to Rs. 25 crores within 3 years of business operations

  
  

  
  

Documents Required for RBI Payment Gateway License

Here is the list of documents required to obtain an RBI Payment Gateway License in India:

• Company’s Certificate of Incorporation (COI)

• Director’s PAN Card

• Address Proof of Directors

• Digital Signature Certificate (DSC) of Directors

• Director Identification Number (DIN) of Directors

• Registered Office’s Address Proof

• Company’s Current Bank Account Details

• Business Plan for the Next 5 Financial Years

• Code Testing Report by a Software Agency

  
  

  
  

How to Apply for a Payment Gateway License Online?

Follow these steps to apply for a payment gateway license in India:

1. Filing of Registration Application

   • Submit an application for authorization in Form A to the Chief General Manager of the Department of Payment & Settlement Systems at the RBI.

2. Authenticity Check by RBI

   • The RBI verifies the information & credentials furnished by the applicant.

3. Compliance with Authorization Conditions

   • The RBI evaluates the fulfillment of conditions required for authorization.

4. Issuance of Authorization Certificate

   • If all conditions are met, the RBI issues the Authorization Certificate in Form B.

5. Processing of Authorization

   • The RBI processes every application within six months from the filing date.

     
     

     
     

Conditions for Obtaining a Certificate of Authorization

The applicant must comply with the following conditions before obtaining a certificate of authorization:

• The necessity for the proposed payment mechanism

• Technical standards for the payment mechanism

• Security procedures for the operation of the payment system

• Fund transfer methods within the payment system

• Netting procedures of payment instructions

• Financial status, experience, and integrity of the applicant

• Customer relationship regulations

• Compliance with RBI’s credit & monetary policies

  
  

IT Requirements for Obtaining RBI Payment Gateway License

Entities seeking an RBI payment gateway license must comply with:

• Information Security Governance: Security risk assessment for IT business processes

• Data Security Standards: Implementation of PCI-DSS, PA-DSS, encryption standards

• Security Incident Reporting: Timely reporting of security breaches to RBI

• Merchant Onboarding: Security assessments during the onboarding process

• Cyber Security Audit and Reports: Submission of audit reports to the IT Committee

  
  

  
  

Types of Payment Gateway Providers

• Second-Party Provider: Offers services at a low TDR (Transaction Discount Rate) but with a high transaction cost.

• Third-Party Provider: Also known as non-bank payment aggregators, they have a low system setup cost and a TDR of around 2-4%.

  
  

How Does a Payment Gateway Operate in India?

1. Encryption: The user’s browser encrypts the transaction data.

2. Request for Authorization: The payment processor transmits the data to the card association for bank authorization.

3. Filing of Order: If approved, the authorization is forwarded to the payment gateway processor for transaction completion.