RBI’s New Directions for Payment Aggregators: What Changed for Cross-border Payments

On 15 September 2025, the Reserve Bank of India (RBI) issued a consolidated Master Direction on the regulation of Payment Aggregators (PAs), including a significant overhaul of the framework for Payment Aggregators - Cross Border (PA-CBs).

Below is a breakdown of some key changes for PA-CBs:

Beyond Export and Import

Old definition: PA-CBs are entities that facilitate cross-border payment transactions for import and export of permissible goods and services in online mode.

New definition: PA-CBs are PAs that facilitate aggregation of cross-border payments for current account transactions, that are not prohibited under the Foreign Exchange Management Act (FEMA), for its onboarded merchants through e-commerce mode.

Under the new definition, PA-CBs can support any current account transaction that is not prohibited under FEMA, expanding their scope beyond facilitating only export or import transactions. This change opens up the PA-CB license for a wider set of cross-border use cases, including permissible transactions such as overseas travel booking, tuition fee payments to foreign educational institutions, etc under the Liberalised Remittance Scheme (LRS).  

Online Mode/ E-commerce

Under the earlier framework, there was ambiguity regarding whether PA-CBs could support payments for transactions conducted over informal or semi-formal channels like email, WhatsApp, or social media, especially where there was no website or digital storefront involved. The RBI has clarified this by defining the term “e-commerce” which is in turn used in the PA-CB definition as follows.

E-commerce:  Buying and selling of goods and services, including digital products, conducted over digital and electronic network.

Explanation: For the purposes of this definition, the term ‘digital & electronic network’ shall include network of computers, television channels and any other internet application used in automated manner such as web pages, extranets, mobiles, etc.

The explanation confirms that as long as the underlying transaction is conducted over a digital or electronic network, it can qualify as e-commerce. Cross-border sales conducted via email threads, WhatsApp messages, or even social media, where the buyer and seller agree on the transaction digitally, may fall within the scope of PA-CB activity, provided the transaction is otherwise compliant.

Transaction Limits

The previous framework provided that in respect of import/export transactions processed by PA-CBs, the maximum value per unit of goods or services sold or purchased for import or export shall be INR 25,00,000. The industry interpreted this to mean that each stock keeping unit (SKU) for the underlying import or export the payment for which was being facilitated by PA-CBs could not exceed INR 25,00,000. A transaction involving multiple units could exceed INR 25,00,000, if each individual unit adhered to the cap.

However, the RBI has now clarified that the limit applies to the maximum value per transaction that can be processed by PA-CBs. This means that the total value of all goods or services in a single transaction must not exceed INR 25,00,000, regardless of the number of units involved.

By capping the value of each transaction, the RBI may be trying to ensure that non-bank PA-CBs do not become conduits for large-value cross-border flows, which are harder to monitor and more susceptible to misuse. It is possible that the limit may be increased gradually, as the RBI gains confidence with regulatory compliance maturity of PA-CBs.  

However, B2B cross-border transactions tend to be large-value and transaction caps may result in PA-CBs losing ground to AD-I banks in processing such transactions. Workarounds to stay within the cap could increase friction and may lead to higher processing costs, making PA-CBs less competitive in this segment.

PA-CBs may also find it operationally challenging to enforce transaction caps in cross-border flows. A large portion of cross-border transactions still rely on SWIFT wires or other bank transfer methods initiated by the payer. Since PA-CBs may not have a relationship with the payer, they may not have the visibility or control needed to implement transaction caps at the payment initiation stage.

Due Diligence and Transaction Monitoring

Under the previous framework, import PA-CBs were required to conduct due diligence on the Indian buyers if the per unit goods or services imported exceeded INR 250,000, in addition to performing due diligence on the overseas merchants. Since PA-CBs typically onboard only the overseas merchants and do not have direct relationship with the Indian buyers, obtaining KYC documents and verifying the buyer’s credentials posed operational challenges, not to mention duplication of compliance efforts for conducting KYC on both sides. The new directions have omitted this requirement, which is likely to free up operational bandwidth for PA-CBs.    

The new framework continues to require PA-CBs to undertake background and antecedent checks of the merchant. It also requires PA-CBs to monitor transactions subsequently undertaken by the merchants to ensure that these transactions are in line with the latter’s business profile. This may result in increased friction in merchant onboarding as PA-CBs may need to seek additional data from merchants to comply.  

Other Operational Changes

• No pre-funding by merchants: Unlike domestic payment aggregators, PA-CBs can no longer permit pre-funding of the inward/outward collection account through funds of its own or of its merchants.

• Settlement timelines: The timelines for settling payments to merchants are now governed by the agreement between the PA-CBs and the merchants. This provides flexibility to structure payout schedules based on operational needs. However, this is bound by the overarching requirements under the FEMA with regard to the timeline for realisation for export and import proceeds.