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Documents of Payment Gateway License in India

Documents of Payment Gateway License in India

The RBI issues a Payment Gateway License that permits the applicant to set up and operate a payment gateway. In simple words, a payment gateway is a gate through which electronic transactions happen. This is accomplished by first creating a secure line of communication between the buyer and the supplier. Then it offers a secure channel for the customer to submit their information and finish the purchase. The payment gateway secures the connection between the customer’s digital payment wallets or bank accounts and the seller’s bank accounts throughout this procedure, and only then does it enable the transaction to proceed. Once the transaction is complete, the gateway charges the relevant payment gateway fees in India. In this article, we will discuss about the documents of payment gateway license in India.

What is the Purpose of the Payment Gateway?

The payment gateway procedure is divided into three stages

  • When the user enters his information into the payment gateway browser, it is encrypted. That information is encrypted to keep it safe from prying eyes.
  • Authorization: The bank receives the encrypted data and decrypts it using its private key to determine whether the information is valid.
  • Finalization: If all of the information is correct, the transaction is completed through the payment gateway.

Payment Gateway Components 

An online payment gateway is made up of two parts that are Payment Gateway Licensees must first enter into an agreement with the merchant who will be using the payment gateway. Electronic transactions are safe; it’s a security mechanism that checks user data without peeping inside. It authenticates the information in this way without jeopardizing the user’s credit card, debit card, or net banking details.

What does a Payment Gateway License Entail?

The Reserve Bank of India issues a payment gateway license to organizations that seek to construct and operate a payment gateway. This license is promoted by RBI for the following reasons- 

1. To encourage safe internet transactions.

2. Ensure that the payment gateway does not expose the personal information of consumers or vendors.

3. To guarantee that no information is at risk.

4. To guarantee that no additional payment gateway costs are imposed on consumers in India.

What Kind of Payment Gateway Providers are Required to have This License?

The payment gateway providers that required getting a payment gateway license are given below- 

  1. Second-party providers

Becoming a second-party provider has a significant system setup cost, but the TDR (a portion of payment gateway costs) or Transaction Discount Rate is minimal, making it more profitable.

  1. Third-party providers

Becoming a third-party provider has a cheap system setup cost, however, the TDR ranges from 2 to 4%.

Payment Gateway License Eligibility Criteria in India

The following are the requirements for obtaining a payment gateway license-

  1. A private or public limited firm must be the applicant.
  2. The organization must be PCI DSS certified.
  3. The company’s net worth should be at least 15 crores.
  4. Within three years of operation, the net value should reach INR 25 crores.
  5. If the applicants are NBFCs or banks, the payment gateway license is only available to those who meet the RBI’s capital criteria.
  6. There is no minimum capital requirement for firms with FEMA licenses to issue foreign exchange PPIs. They would, however, be confined to already permitted transactions.

Documents Required for an Indian Payment Gateway License

The following are the documents needed to register for a Payment Gateway-

  • Incorporation certificate
  • All of the company’s directors are listed on a pan card.
  • The company’s directors’ digital signature certificate.
  • Proof of the registered address is required.
  • The company’s bank account information.
  • The five-year business plan for your organization.
  • Certificate of GST registration
  • The payment gateway system’s software code and a certified software testing agency’s testing report.

Documents Required by different entities 

 Sole Proprietorship Firm

Following are the documents which are needed in case of SPF- 

  • Certificate of Registration (in the case of a registered concern)
  • Municipal authorities grant a certificate/license under the Shop and Establishment Act.
  • Sales tax returns and income tax returns
  • Certificate of Sales Tax/Value Added Tax (CST/VAT)
  • Sales Tax/Service Tax/Professional Tax authorities issue a certificate/registration document.

LLP (Limited Liability Partnership)

Documents regarding LLP are given below- 

  • Registration Certificate (for registered partnership firms only)
  • copy of the partnership deed b a copy of the partnership firm’s Pan Card
  • A resolution was made in favor of an authorized signatory by the board of directors (on the letterhead of the LLP). Note: The date must be in printed format and must be less than 60 days old.

Limited Liability Corporation (LLC)

Documents which are needed in case of LLC- 

  • Memorandum of Association/Articles of Association, as well as a Certificate of Incorporation (1st, 2nd, and 3rd Pages)
  • Information on the directors may be found on the MCA website.
  • Pan Card for the Company.
  • Board of Directors Resolution

Procedure of getting payment bank license

In order to make the process of obtaining a payment gateway license as simple as possible, one can follow the steps given below- 

  • Submit the payment gateway application to the Chief Manager of the PSS Department using FORM A.
  • Don’t forget to pay the payment gateway registration fee together with the application.
  • RBI will begin its evaluation after you submit your application for a payment gateway license. It will verify the information you provided in your applications.
  • When RBI determines that you have submitted a complete application, they begin analyzing it.
  • The RBI will issue you the payment gateway certification of operating payment gateway business in FORM B after it has approved your application.
  • The RBI[1] will provide the payment gateway certificate within 6 months after receiving the application unless there are any difficulties with the application form.

Conclusion – Documents of Payment Gateway License

Don’t be concerned about the hefty registration costs for payment gateways license. Because if you choose to launch a complicated firm with such a broad population, you are already in skilled hands with us. Our mission at bizadvisor.io is to reduce the cost of a professional payment gateway license while increasing the amount of information necessary for online payment gateway registration. So, if you want to set up a payment gateway in India without any hassle, contact our professionals for gateways license.

Read our article:Payment Aggregator and Payment Gateway- Key Differences

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