Govt puts payment aggregators in a bind

Marred by wafer-thin margins and zero merchant discount rate (MDR) on UPI, payment aggregators such as Razorpay, Paytm, PhonePe and Cashfree are now burdened with re-KYC of all merchants under the new RBI Master Direction on Payment Aggregators (September 2025).

Under the new guidelines, PAs must complete re-KYC of all merchants by December 2026. This requires extensive manual effort to re-conduct KYC without disrupting business. For new merchant onboarding, extended KYC is mandatory, and the entire due diligence responsibility lies with the PAs.