The Delhi High Court has on Thursday , held that payment aggregators fall within the definition of the payment system u/s 23 of the Payment and Settlement Systems Act, 2007 , and that the Reserve Bank of India (RBI), has power to regulate them.
The judgement of the court resulted from a writ petition filed by the petitioner, a company engaged in the business of providing “recurring payment solutions” for businesses in India through authorised payment system, to assail three clauses of a circular titled “Guidelines on Regulation of Payment Aggregators and Payment Gateways ,2020, issued by the Reserve Bank of India.
The three clauses, namely clause 3, 4 and 8 of the aforesaid 2020 guidelines, to which challenge was laid by the petitioners, was based on the ground that the same was something which was beyond the powers conferred upon the RBI under Section 18 read with Section 10(2) of the 2007 Act, and also that as the 2007 act making a clear distinction between “payment system”, “system participant” and “ system provider”, the petitioner who only provides a mere intermediary tool in the payment system ,facilitating payment receipts from customers to merchant clients/e-commerce marketing companies etc., cannot be treated as a payment system.
“In our opinion, this protection is vital for securing fully, the interests of the customers and the merchant clients of the PAs. Added to that, the PAs can now get interest on the core funds available in the escrow accounts. The difficulties put forth on behalf of PAs, perhaps are a small wrinkle, which cannot be the reason for striking down the impugned clauses of the 2020 Guidelines. In our view, the public interest element, which is imbued in the framing of the Guidelines, trumps the concerns raised by the petitioners.”- the Court commented, dismissing the writ petition.Subscribe Taxscan Premium to view the Judgment