How Cross Border Payments Are Regulated For Aggregators

The Reserve Bank of India (RBI) has introduced new rules for financial institutions and service providers handling cross-border payments for online imports and exports. This includes companies acting as payment aggregators for international transactions. The updated regulations aim to create a safer, more reliable environment for online payments involving goods and services across countries.

After the new RBI framework is implemented, international transactions will become smoother and more secure. This benefits businesses and individuals handling global purchases. Buying plane tickets or managing travel expenses online will be easier. Stronger oversight will protect users and build trust in cross-border payments. The RBI’s measures will also improve transparency and reliability in the digital ecosystem.

Functional Roles and Payment Operations of PA-CBs

Understanding how Payment Aggregators Cross Border Payments (PA-CBs) operate is essential for businesses and individuals engaging in international transactions; from categorizing service types to managing fund flows and accepted payment methods, these operational guidelines define how PA-CBs interact with customers, merchants, and financial systems while facilitating seamless Cross border payments and trade.

Understanding the Three Types of Cross border Payment Aggregators (PA-CB)

The RBI has classified Payment Aggregators Cross Border (PA-CB) into three categories based on their international transaction types:

• Export-only PA-CB: These handle payments strictly for services and goods being sold to other countries.
• Import-only PA-CB: These focus only on payments made for buying goods or services from abroad.
• Export and Import PA-CB: These manage both incoming and outgoing international payments, supporting full Cross border trade.

Understanding which category a PA-CB falls into helps clarify the scope of services provided, especially when booking international services like plane tickets. This classification also enables better regulation of Cross Border Payments, leading to smoother and more secure transaction experiences for users, while also upholding consumer rights.

How Funds Flow in Import Transactions for PA-CBs

Import-only Payment Aggregators, Cross Border (PA-CBs) must follow a structured process for handling cross border payments collected from customers in India. To start, these PA-CBs are required to maintain an Import Collection Account (ICA) with an Authorized Dealer (AD) bank.

Here’s how the fund flow works: When a customer makes a payment, such as purchasing goods or booking plane tickets from an international seller, the money is first received into the Payment Aggregator’s escrow account. From there, it is transferred to the PA-CB’s Import Collection Account (ICA), and finally settled to the merchant’s offshore bank account.

This regulated flow enhances transparency and security in cross border payments, ultimately supporting smoother and more reliable international transactions for both businesses and consumers.

How Funds Flow in Export Transactions for PA-CBs

Export-only Payment Aggregators, Cross Border (PA-CBs) are required to maintain an Export Collection Account (ECA) with an Authorized Dealer (AD) bank. This account may be held in Indian Rupees (INR) or in foreign currency. If multiple currencies are handled, separate accounts must be maintained for each.

When customers outside India pay for services or products from Indian merchants, the funds first go to the PA-CB’s ECA. From there, the money is transferred directly to the merchant’s bank account within India.

If the export PA-CB settles in foreign currencies, it is allowed only for merchants directly onboarded by the PA-CB. This structured setup ensures secure, compliant processing of cross border payments, while enabling Indian businesses to receive international funds efficiently and reliably.

Permitted Payment Instruments for Import Transactions

Under the latest RBI regulations, customers can use any payment instrument issued by an authorized payment system when making payments for import transactions. These include debit cards, credit cards, UPI-based methods, wallets, and other approved digital payment options. However, there is a clear restriction: small prepaid payment instruments (small-PPIs) are not permitted for import-related Cross border payments.

Small-PPIs are typically designed for low-value, domestic transactions and come with lower limits. Due to their limited traceability and compliance features, they do not meet the standards required for international trade. By excluding these instruments, the RBI seeks to improve security, enhance documentation, and reduce money laundering risks in cross-border payments.

For consumers and businesses, this means using verified payment tools for foreign purchases like booking flights or importing goods. This ensures secure, compliant cross-border payments supported by public financial literacy.

Regulatory Framework and Compliance Guidelines for PA-CBs

To keep cross-border payment services secure and lawful, the Reserve Bank of India created a regulatory framework for PA-CBs. This framework includes mandatory authorization, financial eligibility criteria, strict compliance with KYC norms, and alignment with foreign trade policies. 

These measures are designed to enhance transparency, mitigate risks, and promote responsible participation in the evolving Cross border payments ecosystem.

RBI Authorization Now Mandatory for Non-Bank Cross border Payment Services

Any non-bank company offering cross-border payment services as a PA-CB must get authorization from the Reserve Bank of India. This applies to both new and existing providers to start or continue operations in this payment service space. This authorization, granted under the Payment and Settlement Systems Act, is mandatory to operate as a payment system operator. Existing players can continue operations during the RBI’s review of their applications.

In contrast, Authorized Dealer Category-I scheduled commercial banks do not need separate approval for PA-CB activities. They are already permitted to handle such transactions under the existing regulations that govern their operations.

Non-bank payment aggregators in cross-border payments must express their intent to continue services within a set timeframe. After this, they must apply for authorization. If approved for only one transaction category, like imports, they need separate approval for exports.

This move toward stricter regulatory oversight is aimed at making international payment services more transparent, secure, and accountable. Whether used for global trade or everyday needs like booking international plane tickets, the framework raises the bar for trust and reliability in Cross border payments.

Net-Worth Requirement for Non-Bank PA-CBs

To operate legally, all non-bank entities providing Cross border payment services (PA-CBs) must meet specific financial requirements set by the Reserve Bank of India. These net-worth thresholds are designed to ensure that only financially stable companies are allowed to manage international transactions such as those involved in booking plane tickets or handling trade payments.

Here’s a breakdown of the requirements:

• Existing non-bank PA-CBs must have a minimum net worth of ₹15 crores at the time they apply for authorization.
• New non-bank PA-CBs must also meet the same ₹15 crore net-worth requirement when submitting their application.
• All non-bank PA-CBs are expected to increase their net worth to at least ₹25 crores by the end of the third financial year after receiving authorization.

This requirement ensures that providers offering Cross border payment solutions are financially equipped to deliver safe, reliable services in a growing digital economy.

Customer Due Diligence and KYC Requirements for PA-CBs

Payment Aggregators, Cross Border (PA-CBs) are required to conduct customer due diligence (CDD) and adhere to Know Your Customer (KYC) procedures as specified in the RBI’s Master Directions on KYC. This obligation applies to all merchants they onboard, whether directly connected to the PA-CB, operating through e-commerce marketplaces, or acting as intermediaries such as other payment aggregators.

Additionally, for import transactions, PA-CBs must also perform due diligence on buyers when the value of goods or services imported exceeds a specified high-value threshold per unit. This additional verification step is designed to prevent fraud and ensure compliance with financial and regulatory norms.

By enforcing robust KYC protocols, the RBI aims to create a more secure, transparent, and trustworthy environment for Cross border transactions, whether related to international trade or everyday activities like purchasing plane tickets from foreign platforms.

Mandatory Registration with FIU-IND for Non-Bank PA-CBs

Before applying for authorization from the Reserve Bank of India (RBI), all non-bank Payment Aggregators Cross Border (PA-CBs) are required to register with the Financial Intelligence Unit, India (FIU-IND). This step is essential to ensure that these entities are compliant with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.

The FIU-IND plays a key role in monitoring financial transactions and reporting suspicious activities. By making registration mandatory, the RBI is strengthening oversight of Cross border payment flows and reinforcing the integrity of India’s financial system.

For non-bank PA-CBs handling transactions like overseas purchases or international plane ticket bookings, this requirement ensures their operations remain transparent and accountable from the outset. It also builds greater trust for customers engaging in global payments through these platforms.

Compliance with Foreign Trade Policy

Payment Aggregators Cross Border (PA-CBs) must ensure full compliance with India’s Foreign Trade Policy when processing international transactions. Specifically, they are prohibited from facilitating payments for any goods or services that are restricted or banned under the current trade regulations.

PA-CBs must have systems to screen and monitor transactions, preventing payments for prohibited items or services. For imports or overseas services like booking plane tickets, they must verify each transaction complies with trade rules.

By enforcing this requirement, the RBI ensures that Cross border payments support only legitimate and lawful trade activities, protecting both the financial ecosystem and national interests.

Separation of Domestic and Cross border Payment Accounts

Entities handling both domestic PA and cross-border PA-CB activities must maintain separate accounts for each transaction type. For cross-border payments, the Import Collection Account and Export Collection Account must remain separate from the domestic PA escrow account.

This separation keeps domestic and international fund flows distinct, reducing confusion, compliance risks, and improving transaction transparency. A PA handling local and international services cannot route all transactions through a single escrow account.

By enforcing this structure, the RBI strengthens oversight, ensures proper fund use, and protects domestic and cross-border payment integrity.

Transaction Limit for Cross border Payments

Under the latest RBI regulations, customers can use any payment instrument issued by an authorized payment system when making payments for import transactions. These include debit cards, credit cards, UPI-based methods, wallets, and other approved digital payment options. However, there is a clear restriction: small prepaid payment instruments (small-PPIs) are not permitted for import-related cross border payments.

Small-PPIs are typically designed for low-value, domestic transactions and come with lower limits. Due to their limited traceability and compliance features, they do not meet the standards required for international trade. By excluding these instruments, the RBI aims to strengthen security, improve documentation, and reduce the risk of money laundering in cross border payments.

For consumers and businesses, this means using only verified, full-capability payment tools for foreign purchases. This includes booking plane tickets or importing products, ensuring a safer and compliant cross-border payment experience.

Additional Compliance Requirements for PA-CBs

In addition to the specific Cross border rules, Payment Aggregators Cross Border (PA-CBs) must also comply with a broader set of operational and regulatory standards. These are based on the Guidelines on Regulation of Payment Aggregators and Payment Gateways that apply to domestic payment aggregators.

Key areas of compliance include:

• Governance structure
• Merchant onboarding procedures
• Permissible debits and credits for both Import Collection Accounts (ICA) and Export Collection Accounts (ECA)
• Customer grievance redressal and dispute resolution mechanisms
• Technology standards, including system security and performance
• Fraud prevention and risk management frameworks

These guidelines are designed to ensure that PA-CBs operate in a secure, transparent, and customer-centric manner. Whether processing international transactions for e-commerce, services, or plane ticket purchases, PA-CBs must align with these baseline standards to continue offering reliable and compliant services in the Cross border space.

Conclusion

Cross border payments are a critical part of today’s global economy, especially for industries like travel, e-commerce, and international services. The RBI’s updated rules require Payment Aggregators Cross Border to meet stricter compliance, ensure transparency, and follow structured processes. This framework strengthens user trust, reduces fraud, and improves payment efficiency across borders. 

From authorization to fund flow management, the rules make secure, compliant operations non-negotiable. Booking flights or running an international business requires choosing a compliant PA-CB. This ensures transactions remain protected, reliable, and aligned with India’s regulatory standards. Order Express stands out as a trusted and fully compliant Cross border payment provider, offering customers safe, seamless, and efficient international payment solutions tailored to today’s global needs.

Note: Order Express complies with all applicable BSA/AML, OFAC, and state money transmitter regulations.

FAQs

What is a PA-CB?

A PA-CB is a Payment Aggregator that processes international transactions for imports or exports.

Do PA-CBs need RBI approval?

Yes, non-bank PA-CBs must get RBI authorization to operate legally.der Payments

Can small-PPIs be used for imports?

No, small prepaid payment instruments are not allowed for import payments.

What is an Import Collection Account (ICA)?

An ICA is a bank account PA-CBs use to hold and settle import payments.

Are there transaction limits for PA-CBs?

Yes, PA-CBs can process up to ₹25,00,000 per unit of goods or services.