Digital Payments & Fintech - India

Section 4 of the PSS Act 2007 prohibits operating any payment system without an RBI Certificate of Authorisation. Since 9 May 2025 the Payments Regulatory Board (PRB), replacing the earlier BPSS, grants, regulates and revokes these authorisations.

Prepaid Payment Instruments (e-wallets, the Indian e-money equivalent) are licensed under RBI's Master Directions on PPIs; non-bank issuers need ₹5 crore net worth at application, rising to ₹15 crore, plus mandatory escrow accounts. A Draft PPI Master Direction 2026 was open for comment until 22 May 2026.

RBI's Guidelines on Regulation of Payment Aggregators & Payment Gateways (17 Mar 2020) require non-bank PAs to obtain RBI authorisation under the PSS Act, with ₹15 crore net worth rising to ₹25 crore, escrow accounts and a ban on storing card credentials; consolidated into Payment Aggregator Directions issued 15 Sep 2025.

The Unified Payments Interface, built and operated by NPCI under RBI regulation, is the dominant real-time rail, processing about 20 billion transactions (~₹25 trillion) monthly as of August 2025. RBI's Payments Vision 2028 (March 2026) sets a roadmap including cross-border expansion.

India's open-banking layer is the consent-based Account Aggregator framework, governed by the RBI Master Direction on NBFC-Account Aggregators (2016, last updated 2024). AAs are licensed NBFCs that move financial data only with explicit customer consent.

RBI banned loading PPIs with credit lines (2022), reshaping BNPL. The unified RBI (Digital Lending) Directions, 2025 (8 May 2025) consolidate prior circulars, cap default loss guarantees at 5%, mandate Key Fact Statements and require all digital lending apps to be reported on RBI's CIMS; merchant BNPL sits outside their scope.