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PayPal Holdings’ Indian subsidiary, PayPal Payments Private Limited, received the Reserve Bank of India’s approval to operate as a Payment Aggregator for Cross Border Exports (PA-CB-E). The in-principle approval “opens new avenues for localised product innovations, improved customer experiences, and enhanced access to PayPal’s global payment network for large enterprises, small businesses, and freelancers in India,” the company shared in a press release.
The Central Bank’s approval follows PayPal’s registration with the Financial Intelligence Unit-India (FIU-IND) of the Finance Ministry in February 2024. For context, this guideline was included within the PA-CB rules as a prerequisite for application following a Delhi High Court ruling classifying PayPal as a “payment system operator”. Consequently, it was directed to comply with the Prevention of Money Laundering Act (PMLA), 2002 as a “reporting entity”.
Background
Currently, six entities—Cashfree, Amazon Pay, Ayden India, IndiaIdeas.com, Pay10 Services, and most recently, Wordline ePayments — have RBI authorisation as payment aggregators for cross-border transactions. They are either classified as export only (PA-CB-E), import only (PA-CB-I), or import and export both (PA-CB-E&I). Following the apex bank’s approval, such entities should follow the guidelines of a PA-CB and existing rules for payment aggregators.
Responsibilities of PA-CB
Firstly, export-only PA-CBs should maintain an Export Collection Account (ECA) with an AD Category-I scheduled commercial bank. While the account can be denominated in Indian Rupees (INR) and/or foreign currency, they should maintain a separate ECA for each non-INR currency. These PA-CBs should refrain from facilitating payment transactions for exports of restricted or prohibited products. Finally, they should conduct KYC of merchants and permit settlement in non-INR currencies for only those merchants whom the entity has directly onboarded.
Secondly, import-only PA-CBs should hold an Import Collection Account (ICA) and AD-Category-I scheduled commercial bank account. These entities can only receive payments for imports in an escrow account of the PA. This amount is later transferred to the ICA, and conversely, onward transfer to foreign merchants should be debited from the ICA. Notably, import payments can only be facilitated through payment instruments by authorised payment systems in India, excluding small Prepaid Payment Instruments (PPIs).
Similar to export-only entities, they must conduct KYC of merchants. Further, PA-CB-Is should undertake due diligence of the buyer if the per-unit goods/services imported exceed Rs 2.5 lakh.
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Finally, PA-CB-E&I should fulfil all duties outlined above and maintain separate collection accounts (ICA and ECA).
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