Payment Gateway License
A Payment Gateway License, issued by the Reserve Bank of India (RBI) under Section 5 of the Payment and Settlement Systems (PSS) Act, 2007, is a mandatory authorization for any business that wants to operate a system for processing online payments. This license permits the entity to securely transmi
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What is a Payment Gateway License in India?
A Payment Gateway License, issued by the Reserve Bank of India (RBI) under Section 5 of the Payment and Settlement Systems (PSS) Act, 2007, is a mandatory authorization for any business that wants to operate a system for processing online payments. This license permits the entity to securely transmit transaction information between the customer, the merchant, and the respective banks.
In simple words, it lets a business offer online payment services by safely connecting buyers and sellers for money transfers. Payment Gateways (PGs) that do not handle funds directly but only provide the underlying technology do not need a Payment Aggregator (PA) license. However, they must partner with an RBI-licensed Payment Aggregator and comply with RBI’s regulations.
To operate a payment gateway or act as a payment aggregator in India, businesses must comply with regulations set by the RBI and follow key financial, data, and IT laws. These ensure secure transactions, proper customer verification, and protection of sensitive information.
Eligibility Criteria
The company must be registered under the Companies Act, 1956 or 2013.
There should be at least 2 members in the company.
The company must have a minimum of 2 directors.
Valid address proof of the business is required.
A detailed 5-year business plan must be prepared and submitted.
The company should have a current bank account in its name.
A system flow diagram and code testing report from a certified software testing agency must be provided.
The company should have a Service Tax Registration Number (now covered under GST).
It must follow the PCI DSS (Payment Card Industry Data Security Standard) for data security.
Initial Net Worth:The applicant must have a minimum net worth of Rs. 15 crores at the time of application.
Documents Required
Registration Process
Step 1: Submit the Registration Application
The applicant needs to fill out and submit Form A to the Chief General Manager of the Department of Payment & Settlement Systems, either at the RBI’s Central Office in Mumbai or any other designated regional RBI office. This is done as per Section 5(1) of the Payment and Settlement Systems (PSS) Act, 2007.
Step 2: RBI Verifies the Details
The RBI will then check and verify all the information and documents submitted by the applicant. It may also conduct further inquiries if needed to ensure everything is genuine and complete.
Step 3: Fulfill RBI Conditions
To get the license, the applicant must meet all the necessary conditions set by the RBI under Section 7 of the PSS Act, 2007. These include operational, technical, and financial compliance requirements.
Step 4: License Issuance by RBI
If the RBI is satisfied with the application and all conditions are met under Section 7(1) of the Act, it will issue the Authorization Certificate in Form B, officially allowing the business to run a payment gateway system.
Step 5: Application Processing Time
As per Section 7(4) of the PSS Act, 2007, the RBI will process and decide on the application within 6 months from the date of submission.
Fees & Charges
| Fee Component | Amount |
|---|---|
| RBI Application Fees | Rs. 10,000 – Rs. 25,000 (approx.) |
| Capital Requirement Costs | Rs. 15 crores (application) Rs. 25 crores (within 3 years) |
| Technology and Compliance Costs | Rs. 10 lakhs – Rs. 50 lakhs (depending on system complexity) |
| Professional and Consultancy Fees | Rs. 2 lakhs – Rs. 10 lakhs (or more, based on scope) |
Key Advantages
Enhanced Security and Trust
The license mandates PCI-DSS compliance, ensuring you handle user data securely and building credibility with customers and partners.
Legal Authority to Operate
The license provides the legal foundation to build and offer advanced payment solutions, including white-label wallets and integrated API platforms.
Fraud Screening Tools (FST)
Licensed payment gateways offer tools like Card Code Value (CCV), Address Verification Service (AVS), and Card Verification Value (CVV) to detect and prevent fraud, helping secure users personal and financial data.
One-Stop Solution
A payment gateway acts as a single platform that connects different digital tools like shopping carts, e-commerce platforms, and software systems through one simple API integration.
Access to the Financial Ecosystem
An RBI license is essential for establishing direct partnerships with multiple banks and card networks, allowing you to offer a wide array of payment options (credit/debit cards, UPI, etc.).
Market Expansion Opportunities
The RBI-issued payment gateway license enables businesses to process international payments, helping them grow their reach beyond India and enter global markets.
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