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Payment Aggregator-Cross Border (PA-CB)
Context:
Cashfree Payments, a (Non-Bank) company specialising in banking solutions and payments, received the Reserve Bank of India’s (RBI) approval to operate as a payment aggregator-cross border (PA-CB).
More on News:
- The PA-CB licence positions Cashfree Payments to support global businesses and regulated entities in collecting payments in India.
- It also enables them to provide cross-border payment solutions for Indian exporters and freelancers.
- This comes in line with RBI Payments Vision 2025, focusing on bringing nonbank entities within the RBI’s regulatory ambit.
Cross-Border Payments:
- Financial transactions sent from one country and received in another (payer and the recipient are based in separate countries).
- They cover both the wholesale and retail payments, including remittances.
- Cross-border payments are projected to grow from nearly $150 trillion in 2017 to over $250 trillion by 2027, a rise of over $100 trillion in 10 years.
Payment Aggregator-Cross Border (PA-CB):
- These are entities facilitating online cross-border payment transactions for importing and exporting permissible goods and services, according to the RBI.
- RBI categorises PA-CBs into three categories:
- Export only (PA-CB-E)
- Import only (PA-CB-I)
- Both Export and Import (PA-CB-E&I).
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- These PA-CBs can process import or export transactions where the value of each unit of goods/services sold/purchased doesn’t exceed INR 25,00,000.
- This limit is ‘per unit’ of goods/services and not ‘per transaction’.
- These PA-CBs can process import or export transactions where the value of each unit of goods/services sold/purchased doesn’t exceed INR 25,00,000.
- Non-bank entities seeking to work as PA-CB must obtain approval from the Department of Payment and Settlement Systems (DPSS), RBI, Central Office (CO).
- Regulatory Requirements: In the year 2023, the RBI established minimum net worth requirements for non-banks operating as PA-CBs.
- These include a minimum net worth of Rs 15 crore at the time of application.
- And a Rs 25 crore net worth by March 31, 2026.
- New non-banks must achieve a minimum net worth of Rs 25 crore by the end of the third financial year post-authorisation.
RBI Payments Vision 2025:
- Payments Vision 2025 builds on the foundations laid by Payments Vision 2019-21.
- Theme: E-Payments for Everyone, Everywhere, Everytime (4Es).
- Objective: To offer safe, secure, fast, convenient, accessible, and affordable e-payment options for all users.
- Goals: It is framed around five key goals:
- Integrity, Inclusion, Innovation, Institutionalisation, and Internationalisation.
Indian efforts to push Cross-Border Payments:
- NIPL (NPCI International Payments Limited) a subsidiary of NPCI (National Payments Corporation of India), is expanding the global acceptance of BHIM UPI QR at international merchant locations.
- Indian travellers can now use BHIM UPI QR for retail payments in Singapore, UAE, Mauritius, Nepal, and Bhutan.
International Efforts Towards Cross-Border Payments:
- Roadmap for Enhancing Cross-Border Payments, launched in 2020 by Financial Stability Board (FSB), is the first attempt by the international community towards cross-border payments.
- International Monetary Fund (IMF) and World Bank’s Financial Sector Assessment Programs (FSAPs), are important tools that can be used to support cross-border payments.