In most people’s eyes, till recently, banking seemed a queue in front of the teller to deposit or withdraw cash. But present day’s fintech is a different experience. How has this been achieved? To know this we need to delve into the role of technology viz. payment gateways, aggregators, UPI and more….
One of the most tangible benefits of the demonetization (8th Nov 2016) in India was increase of digital payments (Value of Digital Transactions Across India in Financial Year 2020 and 2021, With Estimates Until 2026, n.d.). In financial year 2021, over 35 billion digital transactions worth over 60 trillion Indian rupees of transactions across India. The transaction value was estimated to rise up to over 385 trillion Indian rupees in financial year 2026 in the country.
Payment gateways and payment aggregators like Razor pay Software Pvt. Ltd., Cc Avenue, PayUMoney, and Bill Desk are entities, which provide technology infrastructure to promote online payment transactions and give banks a centralized way to look after many biller/utility requirements of MIS, reconciliation, consolidated payouts and other service delivery aspects (Discussion Paper on Guidelines for Payment Gateways and Payment Aggregators, 2019).
Government of India (GOI) promoted Clearing Corporation of India Limited to do central clearing and trade warehousing for large value payment systems. GOI also increased research and development in banking technology by promoting Institute for Development and Research in Banking Technology (Roy & Sahoo, 2016). Innovative technologies promote inter-operable standards to allow fund transfers between bank accounts regardless of mobile network. Aadhar Enabled Payment System (AEPS), Aadhar Payment Bridge System (APBS) are payment products to disburse government benefits to beneficiaries. Interbank Mobile Payment Service (IMPS), Bharat Bill Payment Systems (BBPS) are pan India systems launched by National Payments Corporation of India (NPCI) to further boost growth of mobile payments (Duvvuri, 2012).
Risk Management Issues
Risk Management in payment mechanisms is necessary for Proper security, fraud prevention and technology risk management.Payment gateways and payment aggregators gather lot of data and thus risk management is necessary to meet challenges of fraud and ensure consumer protection. They put sufficient information and data security infrastructure to detect and prevent frauds. They do not store customer card credentials within their database or servers accessed by merchants (Guidelines on Regulation of Payment Aggregators and Payment Gateways, 2020b)
Payment gateways and payments aggregators are cross selling/upselling other banking products and services to existing payment customers, monetizing data using analytics, charging for monthly services (Belgavi & Gandhi, n.d.). India’s payment gateways and payment aggregators are growing market share by forming partnerships, investing in projects and launching new products in the market.
- PhonePe received in-principle nod from RBI to operate as a payment gateway (India’s PhonePe to Roll Out Own Payment Gateway, 2022).
- Razorpay acquired IZealiant Technologies, in March 2022 and the acquisition gives power to support banks with exceptional tech infrastructure to improve payment experience for end-users.
- CCAvenue, integrated National Securities Depository Limited (NSDL) Payments Bank’s direct debit facility to benefit Indian e-commerce and give new opportunities for lakhs of Indian web merchants.
- PayU acquired BillDesk, a payment gateway company in September 2021. The combined entity will be getting 4 billion transactions annually (India Payment Gateway Market Share, Size, Growth (2022 – 27), n.d.).
Concerns and Gaps
But there are certain issues to be addressed by all the stakeholders. Activities of payment gateways and payment aggregators in online transactions are extremely crucial due to increasing volume of business. Hence inadequate governance practices may thump customer confidence in this business. Managing customer data, data privacy, know your customer (KYC) requirements of merchants are also important security concerns.
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Do you agree, cyber frauds are taking away all the excitements of fintech innovations? Why?
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- Belgavi, & Gandhi. (n.d.). Evolving business models in the payments industry. PwC India. Retrieved October 3, 2022, from
- Discussion Paper on Guidelines for Payment Gateways and Payment Aggregators. (2019, September 17). Reserve Bank of India. Retrieved October 3, 2022, from
- Duvvuri. (2012, September 12). Indian Payment and Settlement : Systems Responsible Innovation and Regulation. Reserve Bank of India. Retrieved October 3, 2022, from
- Guidelines on regulation of payment aggregators and payment gateways. (2020, November 17). Reserve Bank of India. Retrieved October 3, 2022, from
- India Payment Gateway Market Share, Size, Growth (2022 – 27). (n.d.). Retrieved October 3, 2022, from
- India’s PhonePe to roll out own payment gateway. (2022, September 5). Electronic Payments International. Retrieved October 3, 2022, from
- Roy, & Sahoo. (2016, April). Payment systems in India: Opportunities and challenges. Journal of Internet Banking and Commerce, 21(2), 11
- Value of digital transactions across India in financial year 2020 and 2021, with estimates until 2026. (n.d.). Statista. Retrieved October 10, 2022, from