Cash is going to die soon. It’s just the reality of the current situation. More and more people are getting enamoured by the benefit of electronic transactions and thus, payment gateway license demand has increased. Which begs the question, are you someone who can benefit from this particular type of nuanced business.

Are you someone capable of handling the technology, and the finances to make a robust payment gateway platform?

Are you someone willing to go through the process of getting the payment gateway license?

If you are, than it means that you are willing to come forward and be ahead of the crowd. And if that’s the case, than we have created this blog for you. here you will understand all about the legal requirement of running a payment gateway in India.

What is a payment gateway?

Before we move on to the legal requirement, the payment gateway registration, let’s first take a look with a fresh new perspective at the definition of payment gateway business. It’s a technology that makes electronic transactions happen. And it does so in a way that the data is secure, the transactions doesn’t halt in between and a proper connection is established between the one who is paying and the one who is being paid.

In simple terms, it consists of the following three stages:

  1. The encryption stage: This stage arrives at the time when the user presses the enter button after entering their payment details. The details are codified through an encryption key and are sent to the bank for authentication.
  2. The authentication stage: After receiving your card details, the bank, as per the directions of payment gateway license RBI, authenticates the data. It first decrypts the data using its own private key and then, matches the data with its records. If the results match, an OTP is sent to the payer for authentication stage 2. The users enters the OTP or One Time password which is then authenticated and the transaction is finalized.
  3. The finalization of the transaction: At this stage of payment gateway process, the transaction is finalized and the money is transferred from the payer’s bank account into the bank account of the payee.

So you see, the components that are involved in the process and the process is something that your payment gateway should provide. It’s the reason that RBI has made payment gateway registration mandatory.

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What are the components of the payment gateway?

The payment gateway license India is given based on whether or not all the major components are working together.

  1. Agreement with the Merchant: To make your payment gateway operational after getting the payment gateway certificate, you need to sign an agreement with a merchant.
  2. Secure electronic transactions: To ensure that the payment gateway works in a fruitful way, you need to maintain security towards the credit or debit card data.

If you’re confident enough to get these two components working together, only then you can think about becoming eligible to go through payment gateway registration process in India.

Gaining eligibility for the RBI payment gateway license

Not just anyone can decide and apply for the payment gateway license. If you’re someone who is thinking about it, better understand the following eligibility points:

  1. Incorporation of a business entity is mandatory: Payment gateway is not run by an individual, it’s run by an organization. And because the business is so niche has so much power, the government wants the MCA to watch over it. Which is why, only a private or a public limited company can apply for payment gateway license.
  2. No application without PCI DSS certification: The Payment Card Industry Data Security Standard is an independent standard established by the prominent credit card companies. Their job is to watch over and certify the payment gateway software that are active today. Without their approval, your payment gateway won’t be considered worthy by the RBI for payment gateway license.
  3. Meeting the minimum capital requirements: A payment gateway business is a tricky one. It involves a lot of hardware. A lot of security assurances and a lot of risk mitigation. Which is why, it’s necessary to have a strong financial backbone to start this business. And that’s why, the RBI has established that a Non Banking Financial Company or a Bank must have the minimum net worth of INR 15 Crore if they want to apply for the license. In case you’re neither an NBFC nor a bank, but an entrepreneur, you need INR 10 Lakh at least to setup your business.
  4.  No certification without a proper business plan: Even if you meet the net worth requirements, it isn’t enough. You need to have a good business plan along with your net worth. And as per the guidelines of payment gateway license. That business plan should be robust. It should guarantee that your net worth increases to a whopping 25 Crore rupees after your first three years into the payment gateway business.

It’s quite jarring and frankly intimidating that the requirements of business plan are so high. However, that’s what makes it worth it. Let’s now look at the process of getting payment gateway license in India.

How to get payment gateway registration in India?

Following are the steps concerned with getting payment gateway registration in India:

  1. First, you need to incorporate a company whose objective is to run a secure electronic transaction gateway that is, the payment gateway.
  2. Secondly, you need to get PCI DSS certification for the source code of your license.
  3. Once you’ve obtained the certification and incorporated your company, and you already fall under the net worth eligibility criteria, you can file the application for online payment gateway registration.
  4. The documents that you’re required to upload with the application are as follows:
    1. Incorporation certificate of your payment gateway company
    1. PAN card of all the directors heading your payment gateway company
    1. DSC of all those directors
    1. Address proof of the registered office of the payment gateway company
    1. The business plan of your payment gateway company
    1. Your business plan that’s guaranteed to increase your net worth within 3 years.
    1. The GST registration certificate.
    1. The source code of the payment gateway software.
  5. Pay the payment gateway license fees to finalize the application’s submission.
  6. Get the payment gateway license once the application is accepted by the Reserve Bank of India.


The process of payment gateway registration is hard and chances that you can do it on your own are known. But that’s why there are consultants to assist you. These consultants will provide you end to end services for payment gateway license registration. You can reach out to them whenever you want, for they are always waiting online, waiting for you to click on their site.


Creator of I AM UR TEACHER, Engineer by Degree. 4+ Experience in Digital Marketing, Travel & Gym Lover.

2 thoughts on “Need Payment Gateway License: First know its Legal Requirement”
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