The Reserve Bank of India has proposed new KYC guidelines for Payment Aggregators (PAs), potentially impacting small businesses and solopreneurs. These guidelines mandate Contact Point Verification and bank account validation for small and medium merchants. Small merchants are defined as those with turnover below Rs 5 lakh annually, while medium merchants have turnover below Rs 40 lakh. Compliance includes registration with FIU-IND by September 30, 2025.
While larger PAs may face challenges, smaller ones may struggle more with the additional costs and slower onboarding process. Some PAs might even choose to bypass small and medium enterprises due to the rigorous KYC procedures. The Payments Council of India plans to communicate concerns to the RBI regarding the cost and stringency of the KYC norms.
Startups, especially those reliant on online platforms, anticipate delays and increased operational costs if the guidelines are enforced. Restrictions on settling funds into non-merchant accounts hinder innovation, impacting businesses like marketplaces. However, as these are draft guidelines, there’s hope for industry feedback to be considered before finalization, with a deadline set for September 2025. Despite indications of understanding from the RBI, the bureaucratic nature of the process might burden smaller merchants as PAs lose interest in physical verification.
Read the press release here.
By FCCT Editorial Team
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