What are the capital requirements for a Payment Gateway License in India?

by Vicky Kumar Digital Marketing Expert

Payment gateway license is issued by the Reserve Bank of India to Banks, Non-Banking Financial Institutions and Payment Aggregators so that these entities can provide electronic transaction services by setting up a payment gateway. Running such a business is costly and so is the payment gateway license cost. Thus, in this blog, we are going to look into the capital requirements for a payment gateway license in India.

Current Requirements

As per the general guidelines for payment aggregators updated on November 17, 2020, the current requirements of the Payment Aggregators (PA) consist of the following:

· The PA had to maintain the net worth of INR 15 Crore by March 2021.

· By the end of the third financial year, 2023, these payment aggregators’ net worth should be INR 25 Crore.

· After 2023, the net worth of payment aggregators shouldn’t drop below INR 25 Crore.

The new payment gateway license holders

For the new and upcoming holders of RBI payment gateway license, the Reserve Bank of India has made it mandatory that their current net-worth be INR 15 Crore. It should increase to 25 Crore rupees after three years of grant of the payment gateway license.

Constituents of the net worth

Take the following into account when calculating the net worth of your payment gateway company:

· Paid up equity capital

· Free reserves

· Balance in share premium account

· Capital reserves representing surplus borne out of sale proceeds

· Book value of intangible assets

· Deferred revenue expenditure

· Compulsorily convertible share (cumulative and non-cumulative)

Foreign Direct Investment requirements

In case your payment gateway company has some foreign direct investments (FDI) in it, then when it comes to capital requirements, Reserve Bank of India won’t get involves. This matter will be guided by the Foreign Direct Investment policy of the government of India. The Foreign Exchange Management regulations will provide you the guidance about how much capital you need.

Note: Reserve Bank of India have imposed restrictions on payment gateway companies with FDIs.

Requirement of a net worth certificate?

When you’re applying for the payment gateway license, you’re required to provide your net worth certificate along with the other documents to Reserve Bank of India. This certificate should be signed and audited by a practicing Chartered Accountant. To prove the details provided in the certificate, you must also submit your Balance sheets (audited) to the Reserve Bank of India during the time of application filing.

Shutting down the business of payment gateway

While you don’t need to fulfil the net worth requirements right away, the RBI provides only a definite time within which you have to adhere to them. If you’re not able to do so, you’d need to wind up your payment aggregation business as per the rules.

Conclusion

Follow the capital requirements thoroughly if you want to not let your payment gateway license fees go to waste. If you want any more info about payment gateway license India, our experts can help. They are Chartered Accountants who can assist you in several matters including maintaining the payment gateway compliance.

What are the capital requirements for a payment gateway license in India? In this blog, you’re going to take a look at the capital requirements you need to fulfil to obtain and retain your license.