11 Dec 2023
Marking a key development in the ongoing efforts to regulate cross-border payments, the Reserve Bank of India has released a circular to regulate entities that facilitate cross-border payment transactions for import and export of goods and services. This update analyses the scope of the circular and compliance requirements that are relevant for entities operating in this space.
On 31 October 2023, the Reserve Bank of India (RBI) issued a circular for the ‘Regulation of Payment Aggregator – Cross Border’ (Circular) with the intent of directly regulating all entities facilitating cross-border payment transactions for import and export of goods and services. The Circular categorises such entities as Payment Aggregator – Cross Border (PA-CB) and provides the framework for carrying out such activities including the categories of authorisations required, and net worth requirements.
The Circular streamlines the existing regulatory framework for entities facilitating such transactions. It effectively replaces some existing arrangements (such as processing by collection agents and online payment gateway service providers (OPGSP)) currently used in the industry for cross-border transactions thereby requiring them to adopt the framework applicable to PA-CBs and obtain necessary authorisations to continue operations.
Prior to the Circular, cross-border transactions for import and export of goods and services were primarily enabled through the following arrangements:
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