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List of Eligibility Criteria to obtain the Payment Gateway License

Payment Gateway license is a coveted business registration issued by RBI to those wishing to start a payment aggregator or payment gateway business. However, in order to obtain the license, you have to file its application. And to get the right to file the application, you need to meet the eligibility criteria. 

This article covers all of those eligibility criteria and tells you how to meet them properly. 

The applicant of the payment gateway license should be a company

No individual can handle the vast system that the payment gateway system has and thus, Reserve Bank of India only reserves the right to obtain payment gateway license to a company – a collection of individuals. 

Simply put, you need to register a company before you can apply for the payment gateway license. The procedure of company registration is as follows:

  1. Choose an appropriate name for your company: The name of your company should be unique and as your business is to provide payment gateway, should entail appropriate terms. While such aspects aren’t mandatory, for branding purposes, you’d reach your goals faster if your name resonates with people. 
  2. Get the Digital Signature Certificate of all the directors of the company. 
  3. Get the Director Identification Number of all the directors of the company
  4. File a RUN application to reserve the name that you have chosen for your payment gateway business entity. 
  5. Draft a Memorandum of Association and an Article of Association: The Memorandum of Association or MOA entails the business object of a company. For payment gateway license, you need to mention in this document that your business is to provide payment gateway services. The Articles of Association or AOA entails the rules and regulations of your payment gateway company. 
  6. File the online SPICe application for Company Registration
  7. Once your payment gateway company has been registered, you would get a Certificate of Incorporation. 

Meet the net worth requirement for the payment gateway license

Perhaps you’re not a starting entrepreneur, but a well established NBFC (Non banking Financial Company) or a Bank. In that case, company registration is an unneeded step. However, you’d need to meet the following net worth requirements if you’re an NBFC or a Bank. 

Your minimum net worth should be at least INR 15 Crores.

Now, to a budding entrepreneur, this amount might seem quite steep. But for banks and NBFCs, such an amount is merely part of the legal requirement. 

In case you’re not an NBFC or a bank, your net worth requirements – whether you’re a budding or an established entrepreneur- is as follows:

Your minimum net worth should be at least INR 10 Lakhs. 

Here are some tips to accumulate this amount for the payment gateway license:

    1. Bootstrapping: Creatively find a way to fund yourself. 
  • Apply for government assistance: You can ask the government banks for loan. 
  • Obtain Start-up registration certificate: By obtaining start-up registration certificate, you become equipped with a way to obtain preferential treatment from the government. 

You should have a robust business plan

Believe it or not, RBI has the foresight to ask for a business plan along with other documentation for RBI payment gateway license. If you’re a bank or an NBFC, that business plan should have a way to increase your net worth from INR 15 to INR 25 Crore within three years. 

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While a business plan is also required from a start up, no requirement is given for that business to be robust enough to increase your net worth by twice. 

PCI DSS Certification

Without the approval of the PCI DSS or Payment Card Industry Data Security standard, your payment gateway won’t be blessed by the RBI with a payment gateway license. To obtain PCI DSS, you need to prove to this independent certification body that your payment gateway:

  1. Operates smoothly, and 
  2. Keeps the user data secure. 

You can reach out to IT auditors to ascertain those factors about your payment gateway beforehand. 

Conclusion

While there is not much to be said when there are only four eligibility criteria for a payment gateway.

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