The Indian Railway Catering and Tourism Corporation (IRCTC) intends to become a payment aggregator, and the organization is currently preparing to apply for an aggregator license from the RBI.
IRCTC, a railway PSU (of Indian Railways), has received approval from the Registrar of Companies, NCT Delhi and Haryana, and was further asked to replace the “main objects clause” in its Memorandum of Association (MoA) with a new section to function as a payment aggregator, according to the BusinessLine report.
After that, IRCTC will be ready to enter the Indian digital payment market and will approach the RBI to request a license as a payment aggregator.
Non-bank payment aggregators, including IRCTC, must comply with the Payment and Settlement System Act 2007 and prepare an MoA outlining their preference to become a payment aggregator to receive the RBI’s permission. However, the complete process will take some time, including the application and RBI’s clearance.
It is wise to point you that IRCTC now uses its I-PAY payment mechanism on both its website and mobile application. I-PAY essentially makes it possible to reserve tickets for buses, planes, and trains online.
The IRCTC appears to have a solid user base owing to I-PAY. IRCTC can work with merchants to broaden its reach after receiving RBI approval.
IRCTC shall provide all types of electronic and virtual payment system services, payment systems, prepaid and postpaid payment instruments, payment gateway, and aggregator services, and will carry out business activities following its annual general meeting (AGM).
Additionally, it will function as a bill payment gateway, providing bill payment services following the Bharat Bill Payment System rules.
The change occurred at a time when numerous startups and corporations expressed interest in acting as payment aggregators. Over 180 finance businesses have currently applied for the aforementioned license.
Several fintech startups have also recently received the license to act as payment aggregators, including NTT, Razorpay, Pine Labs, and Mswipe.
To qualify for a license as a payment aggregator, fintech businesses must have a net worth of INR 15 Cr in the fiscal year 2022, according to the RBI. The abovementioned fintech startups can apply for the license by the end of this month after satisfying this criterion.
A payment aggregator is essentially a third-party payment provider that facilitates electronic transactions on behalf of merchants. A payment aggregator can offer a variety of online payment options, including bank transfers, and credit and debit cards, among others after it interfaces with merchant websites.
The RBI started developing the payment aggregator framework in 2020. With this, the central bank planned to regulate the digital payment industry, requiring new participants to adhere to the Payment and Settlement Systems Act of 2007 and get a license.