Electronic transactions through payment gateway is the foundation of digitization of India. However, to start a payment gateway, you need a lot more than a million lines of code, you also need Payment gateway license, an authorization by the Reserve bank of India.
It allows you to run a payment gateway without any being bothered by the legal police knocking at your door.
The most obvious meaning of a payment gateway license is that it’s a permit to start a payment gateway and enable through it electronic transaction services for the people. However, Reserve bank of India, being a hater of everything new, has created very specific restrictions on what type of payment gateways it wants in India.
Through, in this blog, we are going to take a brief look into payment gateway registration in India.
Working of a payment gateway
However, the talk about growth and penetrating a crowded market is a topic for another day. For now, let’s take one step at a time and take a brief look into the payment gateway license.
Before filing the payment gateway application, let’s refresh our brains with the working of the technology implemented to run a payment gateway:
- First, the user’s data is encrypted and transported to the bank.
- The bank decrypts the data, matches it with its records and authorizes the transaction.
- Once the transaction is authorized, the payment is finalized by transferring the money into the payee’s account.
Components of a payment gateway
There are two components of payment gateway certification.
- First, is the merchant agreement in which, as per the laws of the payment gateway license, the promoter of the gateway has to enter into a contract with a merchant.
- Secondly, there is securing the electronic transactions. The Reserve bank of India won’t approve the application for payment gateway license if it doesn’t deem the technology secure enough to protect the private data of the end users.
Understanding the payment gateway license
A payment gateway license is an authorized to setup and run payment gateways in India. That authorization exists because of the following reasons:
- Promoting the online transactions
- Securing the information of the users of the gateway
- ensuring that no one can peek into the payment information of the users
- Preventing any transaction leakage – transaction of amount that exceeds the intended amount.
Eligibility of obtaining Payment gateway by RBI
RBI has set forth the following eligibility criteria that application applicant should meet before they can apply for payment gateway license:
- Payment gateway license RBI can only happen for payment gateways with PCI DSS certification.
- The net worth of the applicant company should be INR 15 Crore.
- The business plan of the applicant company should increase that net worth to INR 25 Crore by the end of the 3rd business year.
- Foreign payment gateways are exempted from the net worth requirements of payment gateway certificate. However, they can only provide their services to a certain pre-decided amount.
Process of payment gateway registration in India
If the applicant meets the eligibility requirements, they can initiate the payment gateway registration process, which is as follows:
- File the application for available in the offline mode : Form A. Submit the form to the Chief Manager of the PSS Department.
- Along with the application, submit the payment gateway license cost. There is a standard fee for payment gateway license and it remains the same regardless of the scale of the payment gateway business.
- The RBI shall then assess the application on the basis of the following parameters:
- Services that your payment gateway is providing the end users.
- The technical standards the portal lives up to.
- The security system designed to protect the personal data of the end users.
- Transfer method used in the payment system.
- Financial stability of the applicant.
- Terms and conditions of the operation of payment gateway.
- How long after the issuance of license, the applicant can start the business.
- After the Reserve Bank of India receives satisfactory answers for the above questions, it issues the license to run the payment gateway.
Documents required for online registration
For the online payment gateway registration, the process is as follows:
- Certificate of Incorporation of the private limited company
- PAN card belonging to the promoters of the company
- DSC of the directors
- Address proof of the registered office of the company
- Details of the bank accounts of all the directors of the company and the company
- Business plan of the company to increase the net worth
- GST registration certificate
- The software code that has been implemented. It has be certified by a software agency authorized to provide certifications.
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RNI payment gateway license can only be obtained if you fulfil the requirements of the licensing process, and the documents. If you are filing the application on your own, remember that you can stumble along the steps. But don’t worry, our experts would be there to pick you up.
If you’re looking for a good business idea considering you’ve a good financial background, go for a payment gateway license. With India moving towards digitization and presence of mediocre electronic payment service providers, getting payment gateway registration gives you a way to penetrate your market and grow.
We will provide you end to end payment gateway license services that’ll feel like you’re breezing through the requirements. For more information about the payment gateway license or if you need help taking the first step towards it, call us today.