Payment aggregator
Also called: PA, Payment gateway · Topic: Payment Systems and Digital Finance · NCERT: Beyond NCERT
Meaning
A payment aggregator (PA) is a company that collects payments from customers on behalf of many merchants. It holds the money for a short time and then settles it, which means paying it on to each merchant's account. Because it handles other people's money, it must keep the funds in an escrow account, a separate account the company cannot use for its own purposes. In India, PAs must be authorised by RBI under the 2020 guidelines, which set net-worth and escrow rules.
Example
A small online bookshop does not build its own payment system. It signs up with a payment aggregator. Customers pay by card or UPI, the aggregator collects the money in its escrow account, and later pays the total into the shop's bank account.
Don't confuse with
- Payment gateway: only the technology that routes payment details between the customer, the merchant and the banks. It never handles the money itself, and it follows only baseline technology recommendations. It does not need full RBI authorisation the way a PA does.