What is a Payment Aggregator?

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What is a Payment Aggregator? Blog Image


Reserve Bank of India (RBI) recently granted payment aggregator licenses to 32 entities.

About Payment Aggregator (PA):

  • A PA (also known as a merchant aggregator) is a third-party service provider that allows merchants to accept payment from customers by integrating it into their websites or apps.
  • It facilitates different types of payment transactions, including cash/cheque, online payments through multiple payment sources, or offline touchpoints.
  • It allows merchants to accept bank transfers without setting up a bank-based merchant account. It means a merchant need not have a merchant account directly with the bank.
  • A PA in India is incorporated under the Companies Act 2013.
  • A PA can be a bank or a non-bank entity.
  • Since a PA handles funds, it requires a license from the RBI. 
  • Only non-bank payment aggregators require unique authorization from RBI as ‘handling funds’ is considered a part of the normal banking relationships for bank PAs.
  • Examples: Amazon (Pay) India, Google India, Razorpay, Pine Labs, etc.

What is a Payment Gateway?

  • It is a software service that connects your bank account to the platform where you need to transfer your money. 
  • It authorizes you to conduct an online transaction through different payment modes like net banking, credit card, debit card, UPI, or other online wallets.
  • A Payment gateway plays the role of a third party that securely transfers your money from the bank account to the merchant’s payment portal.

Payment Aggregator v/s Payment gateway:

  • A payment gateway is a software that allows online transactions to take place, while a payment aggregator is the inclusion of all these payment gateways.
  • While a payment gateway is an intermediary, the payment aggregator is the interface where the payment gateway processes the transactions. 
  • Most payment aggregators own payment gateways to offer various exclusive services to their merchant customers.


Q1)  What is a merchant account?

A merchant account is a type of business bank account that allows a business to accept and process electronic payment card transactions. Merchant accounts require a business to partner with a merchant acquiring bank who facilitates all communications in an electronic payment transaction.

Source: RBI grants payment aggregator licence to 32 entities; Paytm Payments Bank launches UPI Lite