RBI will now step in to regulate PoS payment companies, making transactions more secure

PoS Payment Regulation: RBI will take steps to regulate PoS payment companies like Pine Labs, Innovation, MSwipe. The Reserve Bank of India, after issuing guidelines for online payment aggregators like Razorpay and Cashfree, has announced rules to regulate Point of Sale Payment Service Providers (PA-Ps).

The regulator said that the company will have to obtain RBI approval by May 31, 2025 to provide POS services. If official approval is not received, their service will be banned. Merchant payment aggregators will have to obtain approval for providing services within 60 days from the date of issue of the guidelines.

Suspicious transactions should be reported

The regulator should ensure that an appropriate group of merchants provide a secure customer experience through payment aggregators when availing digital payment services. All PAs will have to become members of the Financial Intelligence Unit of the Finance Ministry. In which any suspicious transaction will have to be reported. All these guidelines apply equally to PA-P as well as online payment aggregators.

What is Point of Sale System?

A point of sale is an electrical device that retail customers use to conduct transactions. Which acts as a cash register. You can pay by credit card, debit card and cash using point of sale terminals. On the other hand, retailers can monitor inventory and gain transparency by tracking purchasing behavior, pricing, and marketing data.

Will bring transparency in digital payments

These guidelines are important in view of the scrutiny of the digital payments ecosystem and the level of KYC undertaken by these service providers through their merchants. Paytm Payments Bank recently faced regulatory action due to improper KYC of its user base.

For ease of operations of payment players, RBI has suggested classifying merchants into small and medium categories. The regulator asked small traders to collect Rs. Defined as physical traders with turnover less than Rs 5 lakh. In the category of medium traders Rs. Rs 5 lakh and above. The annual turnover is up to Rs 40 lakh.