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All You Need to Know About Payment Aggregators in India

Payment Aggregators in India

Payment aggregators in India have grown in popularity in recent years. Accepting payments online is critical to the viability of your business operations. Not being able to make online payments in a cashless, e-commerce-driven economy may frustrate clients and cause you to lose business.

If you want your customers to be able to use their credit cards to purchase goods and services, you must deploy the right payment acceptance and processing solutions. Ideally, this is where you will encounter payment service providers (PSPs), payment gateways, and acquiring banks.

Furthermore, depending on your organization’s circumstances, this is where things might become unclear or too expensive. Not all businesses can open a merchant account due to the lengthy application and approval processes, as well as the high danger of online fraud. A payment aggregator’s business model can help to simplify the situation. Continue reading to find out what a payment aggregator is and whether your company needs one.

What is a Payment Aggregator?

A payment aggregator, also known as a merchant aggregator, is a third-party service provider that enables companies to accept payments from customers by integrating payment functionality into their websites or mobile applications.

A payment aggregator acts as a bridge between acquirers and merchants. Once this is done, you will be able to access a “sub-merchant account”. After that, the payment aggregator will work on your behalf to collect payments from customers. Following a specific period, the money will be transferred to you in instalments. This stage of the process is called settlement.

Under the Companies Act of 1956 (as amended in 2013), a payment consolidator can become a legally recognized entity in India. It is now possible for them to be both a non-banking organization and a bank. Since a  payment aggregator is responsible for handling money, a license from the Reserve Bank of India is necessary. Although, the permission of the RBI is only necessary for payment aggregators that are not banks.

How do Payment Aggregators work?

Now that you know what a Payment Gateway is the next question is How Do Payment Aggregators Work?

Here’s the solution in simple steps:

The payment aggregator accepts the merchant. Following that, they provide them with a sub-merchant account. Essentially, the payment aggregator collects funds on the merchant’s behalf. This also implies that the payment aggregator receives money from the customer through their acquiring bank.

Now, let’s look at how aggregator payment processing works in practice:

1. The customer proceeds to checkout

The customer begins the procedure by selecting a product and proceeding to the checkout. They submit their payment information on the website. The customer can pay through UPI, cards, net banking, wallets, or EMI.

This payment information is tokenized or encrypted by the payment gateway. (Virtual Payment Address in UPI, sensitive card information, or bank account information) Before transferring information to the acquiring bank, the payment gateway also undertakes a fraud check.

2. The Acquirer of the Payment Aggregator receives transaction data

While this is happening, the payment aggregator is working in the background. The transaction data is forwarded to the acquiring bank/acquirer of the payment aggregator. After reviewing the information, the acquirer delivers it to the appropriate card company via the payment processor.

3. The card company performs a fraud check

A card corporation, such as Visa, Mastercard, or American Express, issues each card. The card company validates that the card was issued by them and does a fraud check. The information is then forwarded to the Issuer Bank via the payment processor.

4. The transaction is accepted or declined by the Issuer

The customer’s bank is known as the Issuing Bank or the Issuer. This bank verifies the customer’s information and determines whether or not the consumer has sufficient funds in their account.

Following that, it sends an approval or denial message to the card network. The transaction approval information is now passed through the same path it came from.

5. Issuing Bank> Card Networks> Accepting Bank> Payment Gateway

The payment gateway updates the merchant on the status of the transaction. The merchant then notifies the customer.

6. Funding requests from Acquirers

This is what occurred behind the scenes. After the transaction has been approved, the acquirer requests cash from the Issuer. As previously stated, this is the acquiring bank linked to the payment aggregator.

7. Funds are settled by a Payment Aggregator

The payment aggregator settles the monies in the merchant account. The settlement could be standard, requiring transaction day + 2 to 4 days (T+ 2 to 4 days). On the other hand, the settlement can be instant, even within 15 minutes.

Payment Aggregator Example

A payment aggregator is a platform that lets you accept many different types of payments in one place.

Let’s simplify the situation by using an analogy. Let us assume you own a footwear store. You’ve been considering expanding beyond India for some time. So, you choose to construct stores in London and China.

However, footwear production requires factories, raw materials, chemical dyes, and a great deal more. While other tasks are achievable, it is almost impossible to construct factories in every region of the globe. Therefore, you decide to outsource and rent footwear manufacturing. Now, you can concentrate on producing high-quality footwear without worrying about financing for new factories around the world.

This is the end of the line. Your business is linked to the apparel industry. The outsourced manufacturing facility is the third-party payment consolidator.

Let’s use the example of a payment aggregator to put this into context.

Assume you are a merchant seeking to provide your customers with net banking payment choices.

Performing due diligence and integrating data would take a long time. A substantial investment would also be necessary. This would be similar to building a factory.

A payment aggregator comes into play at this point. A payment aggregator can provide you with multiple payment choices, such as cards, net banking, UPI, wallets, EMI, Pay Later, etc., all under one roof.

Simply stated,

(outsourcing the factory = using a reliable payment consolidator)

The benefits of Payment Aggregators

If you are a business owner and your top aim is to start accepting online and card payments with as little hassle as possible, the ideal option for you is to work with a payment aggregator. Payment aggregators are easy to set up, so businesses can start handling payments right away.

The following are the benefits of using a Payment Aggregator:

1. Cost-effective

The concept of the payment aggregator is a strategy that is both efficient and cost-effective for handling a huge volume of smaller transactions. This is one of the reasons why they are useful for a market. It offers a boost to the processing of electronic wallets as well as credit or debit cards with minimum fees or prices that are fixed.

2. Easy application procedure

It is far easier than setting up your merchant account from scratch. It provides a speedy route into the world of start-ups and small businesses. There is no requirement that you formally submit documentation or meet with a bank representative. Processing payments made through credit cards can typically begin virtually immediately for a company.

3. Simple access

Setting up a payment aggregator takes very little time and effort. All that is required to execute payment for an e-commerce transaction is to sign up. It opens the door for more talented people to enter the market, and it provides customers with a wider range of purchasing possibilities.

Payment Aggregators in India

Payment aggregators in India can be divided into two categories. It could be a private platform or a payment aggregator that banks offer.

Payment aggregators are given by banks and private (third-party) payment aggregators. Payment aggregator services were previously solely offered through banks before the early years of the twenty-first century. For their part, the vast majority of businesses were looking for more cutting-edge payment methods. Third-party payment aggregators stepped in to fill the gap, bringing new ideas to the market and shaking things up. A separate RBI licence is required for non-bank payment aggregators.

SabPaisa’s Payment collection suite streamlines payments collection, payouts, and exhaustive APIs to simplify payments-related complexities of business houses, hospitals, government bodies, SAAS & E-Commerce companies, schools, colleges, & universities, councils etc.


Payment Aggregators in India


Payment Aggregator vs Payment Gateway

Payment Aggregator

Payment Gateway

A Payment Aggregator gives customers different ways to pay, so a merchant doesn’t need to have a separate system for integration.
A payment gateway is a company that sets up the technology needed to process payments online.


The payment aggregator is in charge of the money.
The gateway is in charge of the technology.

If we were to make a comparison, it would go like this.

Let’s use the same example that we used to explain what a payment aggregator is. We know that the payment aggregator is like the footwear factory. Then, the payment gateway is the machine inside the factory. All of this is possible because of technology.

So, a payment aggregator will give you a merchant account, collect the money from your customers, and settle up with you. With the help of a payment gateway, you can store the payment information of your customers. It will also send the information between the acquirer and the customers safely.

SabPaisa has multiple payment modes including Debit cards, Credit Cards, Wallets, UPI, Bharat QR etc. with one of the highest success rates in the industry. It is the first API-driven unified payment experience platform in the world.

Payment Gateway vs Payment Processor

Payment Gateway

Payment Processor

A payment gateway sends processor payment data.

The payment processor sends card payment information to issuing and acquirer banks.


It connects the payment processor to the merchant account and card companies.

Payment processor conducts consumer transactions and sells items and services.


It’s an online POS terminal. The terminal verifies the card. The payment gateway verifies digital credentials before sending payment details to the processor. Online transaction authentication is lengthy and sensitive. E-Commerce websites employ payment gateways for card-not-present transactions.


If a corporation indirectly charges a client, the payment processor must correct it. You (the merchant) suffer a modest cost for refunds or checkout errors. This fee transfers money between your account, the payment processor, and the customer. The payment processing company also uses security measures. This reduces fraud. The payment processor provides a POS interface for offline transactions. They handle payment collection. Cards and other devices.
A payment gateway gathers and sends customer payment details to the processor. The payment gateway then tells the customer and the merchant about the transaction.
Payment processors enable two-party transactions.


Which one do I need: Payment Gateway or Payment Processor?

Let’s take a closer look at the payment gateway and payment processor now that we’ve covered the basics.

Do you always require a payment gateway and a payment processor? Consider the following two possibilities.

When you pay with a card in person, you only need to use the Payment Processor.

Here’s an example of a typical payment cycle:

  1. The company that handles payments will give you (the business owner) a payment terminal.
  2. The payment terminal will verify the card. Then, it will send the payment information to the bank that sent the money. The issuing bank will decide whether or not to approve the transaction.
  3. Lastly, the payment processor will send a message to the physical terminal telling it whether the transaction was approved or not. If the transaction is okay, it will send the information to the bank that is getting the money.

When you use a card in person, you won’t need a payment gateway. However, most firms today choose to sell online and require several payment methods. At this point, a payment gateway is required.

When the Payment Gateway and Payment Processor are used to make a payment.

  1. After choosing a product or service, the customer goes to the checkout. They give their payment information.
  2. The payment gateway verifies the customer’s account number and card issuer. The payment processor transmits data between the payment gateway and the card network. It verifies the card’s validity and 3D-secure status.
  3. Now, the payer authorization process starts. The merchant plug-in sends the Payer Authentication Request/Response (PAReq/PARes) to the Access Control Server. The customer’s CVV gets validated here.

Access Control Server (ACS) will create an Account Holder Authentication Value if this step is successful (AAV). As part of the authorization request, the merchant sends the AAV to the acquirer. The acquirer then sends it to the issuer.

The merchant then sends a request to the acquirer (or the payment aggregator). The payment aggregator will then send the request to the bank to send the payment.

The Card network notifies both the Merchant Plug-in and the bank that issued the card when the card is authorised. If there are sufficient funds in the customer’s account, the authorisation is granted and the funds are processed. Thus, the customer’s authorised funds are transferred to the merchant’s account.

In the end, the transaction goes through and the money moves from the customer’s account to the merchant’s account.


Payment Aggregators in India

Payment Aggregator Guidelines

Payment Aggregators and Payment Gateways are middlemen that help make it easier for people to pay for things online.

1. Authorisation

Non-banking payment aggregators must obtain a separate RBI licence from the Department of Payment and Settlement Systems.

Payment gateways are technology suppliers for payment aggregators. They don’t need permission from the RBI as long as they follow the RBI’s standards and code of conduct for outsourcing financial services and controlling risks.

2. Capital requirements

To get a payment aggregator licence, a company needs to reach and keep a certain net worth. Net worth is the total of compulsorily convertible preference shares, paid-up equity capital, free reserves, the book value of intangible assets, and other things. The latest rule from the RBI says that existing ones must have a net worth of at least 25 crores by the end of the financial year and keep it up.

3. Governance

Payment aggregators need to be run in a professional manner. The RBI says that the investors in a company must be “fit and appropriate.” Other regulators and government agencies will be asked for more information to find out if the applicant business and its management are “fit and proper,” as required by the Reserve Bank of India (RBI).

Agreements between payment aggregators, merchants, acquiring banks, and all other stakeholders should make it clear what each party’s role and responsibility is when it comes to sorting/handling complaints, refunds/failed transactions, return policy, customer grievance redress (including turnaround time for answering questions), dispute resolution mechanism, reconciliation, etc.

4. Anti-money laundering measures

All payment aggregators follow the Know Your Customer (KYC), Anti-Money Laundering (AML), and Combating Financing of Terrorism (CFT) rules set by the RBI.

Furthermore, payment gateways undertake risk assessments. This identifies any vulnerabilities or threats to the confidentiality or integrity of an asset from a contractual or business standpoint.

5. Seller/Merchant onboarding

The board has created an onboarding policy for merchants. They investigate the backgrounds of their merchants to ensure that they are not committing fraud or selling counterfeit items. Payment Aggregators additionally ensure compliance with the Payment Card Industry-Data Security Standard (PCI-DSS) and the Payment Application-Data Security Standard (PA-DSS) (PA-DSS). The payment gateway follows the same criteria during the merchant onboarding step. They undergo rigorous security evaluations.


As we conclude this article, we hope that you will have a thorough grasp of what payment aggregators in India are, how they differ from payment gateways, and what the functions of payment processors and payment aggregators are. We hope that you will be able to describe the functions of payment aggregators and payment processors in particular. It is necessary to have a fundamental understanding of the RBI’s rules and to follow those guidelines.


1. What differentiates a payment aggregator from a payment gateway?

Ans: In contrast to a payment gateway, which provides the infrastructure for payments, a payment aggregator handles funds and transactions. When comparing a payment gateway with an aggregator, this is the most significant difference. The money is in the hands of the payment aggregator, but the technology is in the hands of the payment gateway.

2. What are the two categories of payment aggregators in India?

Ans: In India, there are two main categories of payment aggregators. The platform could be a private platform or a payment aggregator offered by banks.

3. Can a payment processor also operate as a payment gateway?

Ans: Merchants or dealers, in general, act as gateways. Due to the enormous quantity of resources necessary, not all organisations can act as payment aggregators. In the hybrid model, some payment businesses act as payment aggregators and payment gateway.

4. How does a payment gateway differ from a payment processor?

Ans: The payment gateway collects and sends customer payment information to the processor. The payment gateway then notifies the customer and the merchant of the transaction. Payment processors, on the other hand, support two-party transactions.

5. What are the examples of payment consolidators?

Ans: “Payment aggregator” refers to a system that collects a variety of payment options into one place. The service provider would consolidate and integrate many electronic payment methods, such as various payment gateways, under one roof.

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