The Reserve Bank of India (RBI) has recently proposed stricter regulation for non-bank entities offering physical point of sale (PoS) services. According to the draft circular released late Tuesday, the non-bank PoS provider must notify RBI of their intent to seek authorisation within 60 days. They are then required to submit their application for approval by May 31, 2025.
However, the RBI has assured that non-bank PoS providers would be allowed to continue their operations until a decision is made on their application.
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Deadline for Compliance and Ceasing Operations
According to the RBI, entities failing to meet the specified deadlines or not applying authorisation within the stipulated timeframe face stringent consequences. Existing non-bank physical payment aggregators (PA-P) that do not comply with net worth requirements or fail to apply for authorisation must cease operations by July 31, 2025. The Banks have been directed to close accounts associated with PA activities of non-banks by October 31, 2025, unless evidence of a submitted authorisation application is provided.
Compliance and Net Worth Requirements
Non-bank PoS service providers will have to meet minimum requirements in the areas of governance, merchant onboarding, customer grievance redressal and technology/security standards within 3 months from the date of issue of the circular. Interestingly, non-banking institutions must have a minimum net worth of INR 15 Cr at the time of applying, after which this number will increase to INR 25 Cr on March 31, 2028, and beyond that, it will have to be maintained.
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Streamlining Authorization Process
Non-bank POS providers who have shifted their operations to the online segment will have to apply to the Department of Payment and Settlement Systems (DPSS) within 60 days to satisfy the legal requirements to maintain their business. Moreover, the Reserve Bank of India (RBI) clarified that banks offering physical payment aggregation services as a part of their ordinary banking activities do not require separate authorisations but have to comply with the new guidelines within three months of the date of this circular.
