To ease the process of transferring money and make it technology-savvy the Reserve Bank of India (“RBI”) has taken various steps to make the payment process faster, hence Reserve Bank of India has established the payment wallet license or prepaid wallet license. The Payment Gateways acts as an intermediary between the various banks and the websites that furthers the communication of all the data’s and information of the Transactions. To obtain the payment gateway license it is important to submit all the necessary documents and hence, in this article we will let you know about all the Documents of Payment Gateway License in India.
What is Payment Gateway License in India?
An online payment gateway acts as a channel connecting the bank accounts to the portal where the user is required to transfer the respective amount. A payment gateway is a kind of software that allows any person to carry out an online transaction through different payment modes available. A payment Gateway facilitates as the third party that safely and securely transfers the money from the user’s bank account of the merchant’s payment portal.
For example, if someone is purchasing any product from shopping online from any shopping portal like “XYZ” and then you make payment where the payment gateway assists in transferring the money to ”XYZ”.
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The different forms of the payment wallet license are:
The payment services are functioning under the regulations of finances and it is performed via internet, mobile or cards. The issuing and regularity authority that issues the prepaid payment license or the Payment wallet license is the RBI. It is the authority of the RBI to issue rules and guidelines for the prepaid payment wallets. Payment wallet platform are the instruments that make possible the purchase of services and goods against the value that is stored on such instruments. These prepaid instruments are issued as the magnetic stripe cards, internet accounts, smart cards, mobile accounts, paper vouchers and mobile wallets.
What are the Requirements of Payment Gateway License?
The basic requirement of the Payment Gateway License in India is given as follows:
- The said company or entity should be incorporated under the Companies Act 2013 provisions or under the Companies Act 1956;
- At least Minimum number of 2 Members;
- A Minimum number of 2 Directors;
- Complete Address Proof of the Business;
- Detailed 5 years of the Business Plan;
- The Company’s PAN number;
- The Company’s Current Bank Account details;
- The System Flow & Report of Code Testing by the Agency of Software Certifying;
- The Registration Number of Service Tax;
- Compliance with PCI DSS;
What is the Capital Requirement of Payment Gateway License?
The capital requirement of the Payment Gateway License in India is as follows:
- As per the guidelines of the Reserve Bank of India only the Non Banking Financial Companies (NBFCs) and the schedule banks has the requirement for complying with Capital Adequacy Requirements. Moreover, only these are allowed to issue the instruments of prepaid payment,
- All the entities that are allowed to issue the foreign exchange Prepaid Payment Instrument under the provisions of Foreign Exchange Management Act 1999 (FEMA) are relaxed from the guidelines of RBI and the scope. Furthermore, the utilization of such instruments shall be limited to the acceptable dealings and current account transactions and are subject to the standard restrictions under the Foreign Exchange Management (Current Account Transactions) Rules 2000, as has been amended accordingly.
What is the procedure of Registration for Obtaining Payment Gateway License in India?
The applicants should be prepared with the documents of Payment Gateway License before getting involved in the procedure of registration for getting the License in India and it is as follows:
- To File Application For Registration
The first step requires the applicants to file an application to obtain the authorization in the approved Form A. It is done on the basis of the section 5(1) of the PSS Act provision.
Moreover, the same application shall be submitted to “Chief General Manager” of the “Department of Payment & Settlement Systems” at the RBI Central Offices located at Mumbai, or at different offices of the RBI, as will be prescribed from time to time.
- RBI Checks Authenticity
Based on the provisions of section 6 of the Payment and Settlement System Act 2007, it is completely discretionary to obtain the RBI’s permission for issuance of the authorization.
In addition, the Reserve Bank of India (RBI) reserves the authority to carry out such kinds of inquiries as may be required with the purpose to satisfy themselves concerning the authenticity of the details and information that have been given by the applicant and also to check the qualifications of all the involved participants.
- Compliance Of the Conditions for getting Authorization
The Reserve Bank of India will take into considerations the following conditions before issuing the authorization:
a) All the technical standards that have been decided for making the payment mechanism or finalized for the payment system structure,
b)The necessity for the system of proposal payment or other services that has been recognized to be undertaken;
c) The terms and conditions including the security procedure that is decided for the functioning of proposed payment system;
f) The financial status and general experience of the management and the integrity of the applicant;
d) The procedure in which the transfer is done in the respective payment system;
e) The technique or the way for getting the directions of payment that can affect the payment conditions under the payment system;
g) The terms & conditions that manages and administer the relationship of the customers with the respective payment provider;
h) The monetary policies and the credit;
i) Time frame for authorization;
- Issuance Of the Authorization Certificate
If the Reserve Bank of India feels satisfied that all the conditions under section 7(1) are fulfilled accordingly, then it may give the Authorization Certificate in the Form ‘B’ for carrying or initiating the payment system to the applicant. Furthermore, the approval shall be effective from the date as approved by RBI and as per the conditions imposed by the RBI.
- Authorization Within 6 Months
Based on the provision of section 4 of the Payment and Settlement System Act 2007, it is obligatory for the RBI to process the application filed for authorization within a maximum time limit of six months, which shall start from the date from which the application for the authorization was filed.
What are the required Documents of Payment Gateway License in India?
The important documents of Payment Gateway License in India and are required to be submitted for obtaining the license are as follows:
- Company’s Certificate of Incorporation’s copy issued by the Registrar of Companies (ROC);
- The complete information of the PAN Card of all the Directors;
- The Complete Address and other contacts of the Directors;
- Digital Signature Certificate(DSC) of the Directors;
- Director Identification Number(DIN) of the Directors;
- The detailed Address of the Registered Office;
- The Company’s existing Bank Account details;
- The Company’s Business Plan for total five Financial Years;
- The Report of the Software Agency regarding the Testing Code.
There are numerous benefits of the prepaid wallets and the payment gateway license as they have become the method through which the latest age transfers money. These are no chances that these wallets can get stolen and are also a fast track method for transferring. Therefore, it is important for the user to submit all the above mentioned documents of payment gateway license for obtaining the license. Hence, as per the main checklist, the required documents of payment gateway license are the major criterion for getting the license.
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