What changed
RBI has decided to bring all entities facilitating cross-border payment transactions for import and export of goods and services under its direct regulation, treating them as Payment Aggregator-Cross Border (PA-CB). Previously, such entities were governed by separate circulars and specific approvals; now they fall under a unified framework. Non-bank PAs providing cross-border services must apply for RBI authorization by April 30, 2024, and adhere to governance, security, and risk management guidelines within three months.
What it means for you
Banks and non-bank payment aggregators handling cross-border payments now face a single regulatory regime, reducing fragmentation. AD Category-I banks are exempt from separate authorization but must still comply with the new instructions. Non-bank PAs have a tight timeline to apply and upgrade systems, which may increase compliance costs but also bring clarity and level the playing field.
What you must do
- Non-bank PAs facilitating cross-border payments must apply for RBI authorization by April 30, 2024, specifying category (export only, import only, or both).
- Ensure compliance with existing PA guidelines on governance, merchant on-boarding, customer grievance redressal, dispute management, technology, security, fraud prevention, and risk management within three months from October 31, 2023.
- AD Category-I banks should review their cross-border payment operations to align with the new PA-CB framework, even though separate authorization is not required.
- Update internal policies and systems to treat cross-border payment aggregation as a regulated activity under the Payment and Settlement Systems Act and FEMA.
Who it affects
Non-bank Payment Aggregators handling cross-border transactions, AD Category-I banks involved in cross-border payment processing, Payment system providers and participants in cross-border trade, Merchants engaged in import/export via online payment gateways
Do AD Category-I banks need to apply for PA-CB authorization?
No, AD Category-I banks are exempt from separate RBI approval for PA-CB activity, but they must comply with the new instructions.
What is the deadline for non-bank PAs to apply for authorization?
Non-bank PAs currently providing cross-border services must apply to RBI by April 30, 2024, and can continue operations until RBI communicates its decision.
What categories can non-bank PAs choose for authorization?
They can apply for Export only (PA-CB-E), Import only (PA-CB-I), or both Export and Import (PA-CB-E&I).