How you can start a payment gateway business in India?

A payment gateway is how electronic transactions are made secure. Acting as a tunnel, they connect the money sender and money saver’s account while not peeking in the confidential details of either of them. As digitization of India is on the rise, starting this particular business presents a lucrative prospect. So, how to start a payment gateway business in India. 

It all come downs to the payment gateway license

While we can all talk and quibble about the technical aspects of running such a complex business, the truth is, at the end of the day, it’s the payment gateway license you’re after. So, without wasting time, let’s discuss:

  1. The definition of payment gateway license
  2. Types of payment gateway providers that require the said license. 
  3. Eligibility requirements for the payment gateway license
  4. The process of getting the payment gateway license
  5. And, the documents required for the license

The definition of payment gateway license

Let’s first discuss the payment gateway meaning. It’s a digital tunnel – providing a safe and secure space in which electronic transactions can happen. Because it’s a system that has the potential of compromising the confidentiality of the end users, Reserve Bank of India has made payment gateway license mandatory under the Payments and Settlement’s System Acts, 2007.

Types of payment gateway providers that require the payment gateway license

There exist two types of payment gateway providers:

  1. Second party providers: These are akin to first party providers that provide low transaction discount rate. Thus, they tend to have high payment gateway charges. However, the trade-off is the cost of setup is high. 
  2. Third party providers: These type of providers of payment gateway in India provide high transaction discount rate. As a result, they tend to attract more prospects and the cost of setup is low. 

Eligibility Requirements for payment gateway license

There are six requirements to start a payment gateway business:

  1. Before applying for the payment gateway registration, you need to establish your business entity by registering it as a private or a public limited company. 
  2. Once you do, you have to become compliant to PCI DSS. The Payment Card Industry Security Standard is an independent certification organization focusing on setting rules to maximize the data security when online transactions are going on. 
  3. The company’s net with should be 15 Crore rupees. Once the operations get started, it should become worth 25 Crore rupees within a span of 3 years.
  4. In case of non banking financial companies (NBFCs) and banks, only those who adhere to the capital requirements of RBI can get the payment gateway license. 
  5. In case the applicant is neither an NBFC nor a bank, Net owned funds of at least 10 Lakhs are needed. 
  6. Companies with FEMA authorization to issue foreign exchange don’t have any capital requirements. Instead, their transactions would be limited as per the Foreign Exchange management rules, 2000. 

The process of getting the payment gateway license

Following is the step wise step description of the route you have to take to get the license:

  1. File the application of payment gateway license while addressing it to the Chief Manager of the PSS Department. 
  2. Reserve Bank of India shall begin the assessment of your application on an immediate basis. 
  3. After initial, or level 1 assessment, RBI starts to check your application based on the following:
    1. The business that you conduct through payment system. 
    2. Technical standards you’ve implemented in your system.
    3. Security systems you have integrated with the gateway to protect the data of the end users. 
    4. Money transfer methodology used for payment gateway. 
    5. Payment instructions you’ve presented the user and how it impacts them. 
    6.  Your financial stability to keep your payment gateway business afloat. 
    7. Terms and conditions you’ve implemented to watch over the relationship between payment providers and end users (customers)
    8. Credit and monetary policies you have implemented.
  4. After proper assessment, you’ll obtain the Payment gateway license if RBI is satisfied with it. 

Documents required for the payment gateway license

To get the payment gateway license, following are the documents you require:

  1. COI of your payment gateway company
  2. PAN card of all the involved directors of that company
  3. DSC of the same personnel. 
  4. Address proof of registered office of the company. 
  5. Bank account details of the payment gateway company. 
  6. Your payment gateway company  5 year business plan
  7. GST certificate for your company.
  8. The source code of the payment gateway software
  9. Testing report of the software by the software testing agency.


Payment gateway license, the authorization to create a safe tunnel for electronic transactions need the supervision of Reserve bank of India. Thus, RBI has made it specifically difficult to get the license. the compliances alone can make your head spin. But don’t worry, for you’re not alone. Payment Gateway consultants would share your burden and get you your license on time. 

How to start a payment gateway business in India? It all comes down to the payment gateway license. This blog is an attempt to inform you about the payment gateway license. So read and find out.  There are many ways to start this payment gateway license. So don’t wait too much. Until it become too late for you. Payment gateway license can be start today.

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