Payment Aggregator: Meaning, Types & How It Works
TL;DR - Summary
- What is a payment aggregator? - A payment aggregator is a third-party payment provider that lets businesses accept multiple payment methods through one integration while handling merchant onboarding, payment collection, and settlement.
- How does a payment aggregator work? - A payment aggregator onboards the merchant, routes customer payments through the relevant payment infrastructure, holds collected funds in the prescribed escrow account, and settles them to the merchant after applicable fees and adjustments.
- What are the types of payment aggregators in India? - Payment aggregators include bank-led PAs, non-bank or third-party PAs, and Payment Aggregator-Cross Border (PA-CB) entities that facilitate eligible international payment flows.
- How do you choose the right payment aggregator? - Compare payment methods, pricing, integration, settlement timelines, security, RBI authorisation, reporting, and customer support based on your business requirements.
What Is a Payment Aggregator?
A payment aggregator gives businesses one route for accepting different types of digital payments, such as cards, UPI, net banking, and wallets. Instead of setting up separate merchant arrangements with different banks, the business can integrate the aggregator once and use its payment infrastructure.
- The merchant completes onboarding with the aggregator, which manages payment acceptance through its own setup rather than requiring an individual merchant account and MID with every bank.
- When a customer pays, the money is kept separately from the aggregator's operating funds in the required escrow account maintained with a scheduled commercial bank. The funds are then transferred to the merchant according to the agreed settlement cycle.
- A non-bank PA in India must obtain an RBI Certificate of Authorisation under the Payment and Settlement Systems Act, 2007 and the applicable RBI (Regulation of Payment Aggregators) Directions, 2025.
- A domestic PA authorisation does not by itself permit cross-border payment aggregation. Businesses collecting eligible payments from overseas need a provider with the relevant PA-CB authorisation.
How Does a Payment Aggregator Work?
A payment aggregator simplifies the payment process by connecting a merchant to multiple payment methods through one platform. It handles the transaction flow between the customer, payment networks and financial institutions, while the collected funds are settled to the merchant through the prescribed process.
How a payment aggregator handles a transaction
Plays automatically. Hover a step to stop on it.
Merchant onboarding. The business registers and clears KYC, then accepts payments through the aggregator.
Merchant onboarding. The business registers with the aggregator and clears KYC and verification, then accepts payments through its infrastructure instead of setting up acquiring for each method.
Customer initiates payment. At checkout they pick UPI, card, net banking, wallet or EMI and enter their details.
Customer initiates payment. At checkout the customer selects an option (UPI, card, net banking, wallet or EMI) and provides the details needed to pay.
Request is routed. The aggregator sends it to the right network or bank and runs fraud and risk checks.
Payment request is routed. The aggregator sends the transaction through the relevant network, bank or infrastructure, and may run fraud and risk checks along the way.
Authorised or declined. The bank or issuer approves or declines, and the status goes back to both sides.
Payment is authorised or declined. The customer's bank or card issuer approves or declines, and the resulting status is sent back to both customer and merchant.
Funds held in escrow. For a non-bank PA, funds sit in a prescribed escrow account, separate from its own money.
Funds are held in escrow. For a non-bank aggregator, collected funds sit in the prescribed escrow account with a scheduled commercial bank, kept separate from the aggregator's own operating funds.
Merchant is settled. Funds settle after charges. T+1 is not a universal period for every PA.
Merchant receives the settlement. The aggregator settles funds after applying charges. The period depends on the arrangement and regulation, so T+1 is not universal for every PA.
Many methods, one integration. The aggregator holds the connections, so you offer several options from a single setup.
Multiple payment methods through one integration. Because the aggregator maintains the underlying connections, a merchant offers several payment options from a single integration, not one build per method.
Step 1: Merchant Onboarding
The business first registers with the payment aggregator and completes the required KYC and business verification. Once approved, it can accept payments through the aggregator's infrastructure instead of establishing separate acquiring arrangements for each payment method.
Step 2: Customer Initiates Payment
At checkout, the customer selects an available option such as UPI, card, net banking, wallet or EMI and provides the information needed to make the payment.
Step 3: Payment Request is Routed
The aggregator sends the transaction through the relevant payment network, bank or payment infrastructure. Its systems may also perform fraud and risk checks as part of the transaction process.
Step 4: Payment is Authorised or Declined
The customer's bank or card issuer evaluates the transaction and sends back an approval or decline response. The resulting status is then communicated to the customer and merchant.
Step 5: Funds are Held in Escrow
For a non-bank payment aggregator, funds collected for merchants are maintained in the prescribed escrow account with a scheduled commercial bank. They are kept separate from the aggregator's own operating funds.
Step 6: Merchant Receives the Settlement
The aggregator settles the merchant's funds after applying the applicable charges and adjustments. The settlement period depends on the relevant arrangement and regulatory requirements, so T+1 should not be treated as a universal settlement period for every PA.
Step 7: Multiple Payment Methods Through One Integration
Because the aggregator maintains the underlying payment connections, a merchant can offer several payment options through a single integration rather than building each payment connection independently.
How Does the Aggregator Earn
Payment aggregators can generate revenue through applicable transaction charges and other services, including payment-related products, payouts, subscriptions and value-added services. UPI and RuPay debit-card transactions currently have zero MDR under the applicable government framework, so the revenue model differs across payment methods and services.
What Are the Types of Payment Aggregators in India?
Payment aggregators in India can be grouped into bank-led payment aggregators and non-bank payment aggregators, while cross-border collection and payout activity is covered separately under the Payment Aggregator-Cross Border (PA-CB) framework.
1. Bank Payment Aggregators
Banks can provide payment aggregation as part of their existing regulated banking activities, so they do not need the separate RBI authorisation applicable to non-bank PAs. Their existing banking relationships can make them suitable for larger enterprises, although onboarding, integration speed, pricing and technology features vary between banks. Some bank-led solutions may also offer fewer merchant-facing analytics and payment-management features than dedicated fintech platforms.
2. Third-Party Payment Aggregators
Third-party PAs are non-bank companies that require RBI authorisation to provide payment aggregation services. They typically give merchants one integration for several payment methods and may offer features such as faster onboarding, transaction dashboards, reconciliation, sub-merchant management, payouts and risk controls.
Examples of non-bank payment aggregators operating in India include Razorpay, Cashfree Payments, PayU, One97 Communications (Paytm), PhonePe, BillDesk, Infibeam Avenues (CCAvenue), Pine Labs, Google Pay India and Amazon Pay India, subject to their respective RBI authorisations and approved activities. RBI's authorised-entity list should be checked for the latest status because an entity's authorisation and permitted activities can change.
3. Payment Aggregator-Cross Border (PA-CB)
PA-CB is a separate RBI category for entities facilitating eligible online cross-border payments relating to the import and export of goods and services. The framework was introduced on October 31, 2023 and has three sub-categories:
- PA-CB-E: Facilitates eligible export-related inward payments received by Indian businesses from overseas.
- PA-CB-I: Facilitates eligible import-related outward payments from Indian businesses to overseas merchants.
- PA-CB-E&I: Covers both eligible export and import payment flows.
PA-CBs must comply with applicable FEMA requirements, as well as RBI rules covering KYC, reporting, transaction monitoring and reconciliation of cross-border payment flows. The current RBI framework is set out in the RBI (Regulation of Payment Aggregators) Directions, 2025.
What Are the Key Benefits of a Payment Aggregator?
The key benefits of a payment aggregator include quicker setup, access to multiple payment methods through one integration, built-in payment security, centralised settlement management, and infrastructure that can scale with transaction volumes.
Key Benefits of a Payment Aggregator
- Easy Setup: Businesses can start accepting payments without establishing separate merchant arrangements with multiple banks or investing in their own payment infrastructure.
- Multiple Payment Options: One integration can support UPI, cards, net banking, wallets, EMI, and BNPL, giving customers different ways to pay.
- Built-in Security: Aggregators use measures such as encryption, tokenisation, fraud screening, and transaction-risk checks to protect payment information.
- Simpler Reconciliation: A central dashboard can bring together transactions, settlements, refunds, and related payment records, reducing manual reconciliation.
- Faster Launch: The aggregator manages the underlying bank and payment-network connections, allowing businesses to start accepting payments without setting up each connection independently.
- Scalability: Aggregator infrastructure can accommodate increasing transaction volumes across e-commerce, marketplaces, and subscription businesses.
- Additional Tools: Depending on the provider, businesses may get recurring billing, subscription management, analytics, sub-merchant onboarding, and split-payment capabilities.
What Are the Drawbacks of a Payment Aggregator?
- Payment Holds: New accounts, unusually large transactions, or activity flagged by risk systems can lead to reviews or temporary holds, affecting cash flow.
- Higher Costs at Scale: Standard aggregator pricing may become less economical than a negotiated direct-processing arrangement when transaction volumes become very high.
- Less Control: Businesses generally have less control over underwriting decisions, account restrictions, and certain dispute processes than they would with a direct merchant-acquiring relationship.
Note: A payment aggregator is different from a payment gateway.
What Businesses Need to Use a Payment Aggregator?
Startups, SMEs, e-commerce stores, subscription businesses, marketplaces, service providers, nonprofits, and mobile app businesses can use payment aggregators to accept multiple digital payment methods through a single integration without setting up separate payment arrangements with different banks.
- E-commerce Stores and Retailers: Online businesses can accept UPI, debit and credit cards, and digital wallets through one payment setup instead of managing separate arrangements for each method.
- Subscription and SaaS Businesses: Companies collecting recurring fees can use recurring billing and e-mandates to manage subscriptions, renewals, and refunds.
- Marketplaces and Gig Platforms: Platforms working with multiple sellers or service providers can use sub-merchant onboarding, split payments, and seller payouts to manage multi-party transactions.
- Startups and Small Businesses: Businesses with limited technical resources can use an aggregator's existing infrastructure instead of building individual payment connections.
- Nonprofits and Service Providers: Organisations can use ready-to-integrate payment or donation pages with transaction tracking and reporting.
- Mobile App Businesses: Apps for gaming, food delivery, ticketing, and similar services can use payment aggregation to accept digital payments within the customer journey.
- High-Risk or Regulated Businesses: Businesses in higher-risk or heavily regulated sectors may need specialised payment solutions, enhanced underwriting, or a direct processor relationship instead of a standard aggregator.
Related Read: Freelance payment methods in India.
Payment Aggregator vs Payment Gateway: What Is the Difference?
The key difference between a payment aggregator and a payment gateway is that a payment aggregator facilitates payment collection and merchant settlement, while a payment gateway primarily provides the technology for securely transmitting payment information and transaction responses without handling the underlying funds.
| Feature | Payment Gateway | Payment Aggregator | PA-CB (Cross-Border) |
|---|---|---|---|
| Core job | Transmits payment information and transaction responses between the merchant and payment infrastructure | Collects payments and facilitates merchant settlement | Facilitates eligible cross-border payment collection or payouts |
| Merchant account needed | Generally requires an acquiring-bank/merchant arrangement | Merchant can be onboarded through the PA's infrastructure | Merchant onboarding follows the PA-CB framework |
| Who holds funds? | Does not handle the merchant's funds | Funds are maintained through the prescribed escrow arrangement | Cross-border funds are handled through the prescribed PA-CB account and escrow arrangements |
| Direction | Primarily domestic or cross-border depending on the gateway and acquiring setup | Primarily domestic payment aggregation | Eligible cross-border import and export transactions |
| RBI authorisation required? | No PA authorisation if it only provides payment technology and does not handle funds | Yes, for non-bank PAs | Yes, for non-bank PA-CB activity |
| FIRC/FIRA | Not inherently provided by the gateway | Depends on the payment channel and provider | Applicable remittance documentation depends on the transaction and payment channel |
Payment gateways and aggregators differ by:
- Role: A payment gateway securely transmits payment information for authorisation. A payment aggregator combines payment acceptance with merchant onboarding, fund collection, and settlement.
- Merchant Relationship: A traditional gateway arrangement generally involves the merchant's own acquiring relationship, whereas an aggregator can onboard the merchant through its own payment infrastructure.
- Fund Handling: A gateway that only provides technology does not handle customer funds. A payment aggregator handles collected merchant funds through the prescribed escrow mechanism.
- RBI Treatment: A pure payment gateway that only provides technology is outside the RBI's PA authorisation framework. Non-bank payment aggregators that handle funds require RBI authorisation.
- Best Fit: A direct gateway arrangement can suit established businesses that want greater control over their acquiring relationship and payment setup. An aggregator can be more convenient for businesses seeking consolidated onboarding and multiple payment methods through one integration.
- Overlapping Products: Providers such as Razorpay and PayU offer payment-gateway and payment-aggregation capabilities, which is why the terms are sometimes used interchangeably. Under the RBI framework, however, the underlying functions remain distinct.
- Cross-Border Payments: PA-CB is the specific RBI category for eligible cross-border payment aggregation. Whether a provider can collect foreign payments, hold or convert funds, settle them, and provide remittance documentation depends on its authorisation and the specific service being used. A PA-CB authorisation should therefore not be treated as an automatic guarantee of a particular document such as a FIRA or FIRC.
Also Read: 2D vs 3D payment gateways
Payment Aggregator vs Payment Processor: Key Differences
The key difference is that a payment aggregator simplifies payment acceptance by onboarding multiple businesses under an aggregated account structure, while a payment processor provides the infrastructure that authorises, routes and processes transactions between the parties involved.
| Feature | Payment Aggregator | Payment Processor |
|---|---|---|
| Primary role | Onboards merchants, facilitates payment acceptance and manages settlement | Processes and routes transactions for authorisation and settlement |
| Merchant account | Merchants generally operate under the aggregator's master account structure | Typically works with a merchant's dedicated acquiring or merchant-account arrangement |
| Handles settlement | Settles funds to the merchant after applicable fees | Facilitates settlement through the acquiring infrastructure |
| Risk management | Handles merchant onboarding, risk checks and ongoing monitoring | Merchant typically has greater direct responsibility for compliance and risk |
| Pricing model | Often uses simpler, bundled transaction pricing | Pricing varies and may be more flexible for high-volume businesses |
| Best for | Small businesses and businesses seeking faster, simpler setup | Larger or high-volume businesses seeking greater control and customisation |
How Do They Differ?
The differences become clearer when you compare how each model handles setup, risk, pricing and settlement.
- Setup: Aggregators offer simpler onboarding and a single integration for supported payment methods, while direct processor arrangements generally involve more detailed underwriting and integration.
- Control and Risk: Aggregators manage the merchant relationship and may impose holds or restrictions under their risk policies. Direct processing gives businesses more control but also more responsibility.
- Cost: Aggregators often use simpler pricing, while direct processing arrangements may offer more pricing flexibility at higher volumes.
- Settlement: Aggregators manage settlement to merchants, while processors facilitate transaction processing and settlement through the acquiring infrastructure.
How To Choose the Right Payment Aggregator for Your Business?
Choosing the right payment aggregator depends on seven factors, i.e., payment methods, pricing, integration, settlement speed, security, reporting and customer support.
- Payment Methods: Check whether the aggregator supports the methods your customers use, including UPI, cards, net banking, wallets, EMI and BNPL. For example, PayU currently supports 150+ payment methods.
- Pricing and Fees: Compare the MDR, setup fee, AMC and payout charges. For example, Razorpay currently charges 2% + GST per transaction, with ₹0 setup and AMC, while Cashfree lists 2.99% for international card payments.
- Integration: Look for REST APIs, mobile SDKs and plugins compatible with your website or e-commerce platform. Also check the quality of developer documentation and support. PayU, for example, supports APIs, SDKs and plugins for platforms such as WooCommerce and Shopify.
- Settlement Cycle: Check when funds reach your business bank account. Current examples include T+1 standard domestic settlement at Razorpay and Cashfree, while PayU offers T+2 standard settlement and priority settlement options.
- Security and Compliance: Verify PCI-DSS compliance and ensure the provider has the appropriate RBI authorisation for the payment services you need, including the relevant PA-CB authorisation for eligible cross-border transactions.
- Reporting and Reconciliation: Choose a provider with dashboards for tracking transactions, refunds and settlements, reducing manual reconciliation work.
- Support and Reliability: Check support channels, uptime and how quickly the provider handles payment failures, disputes and settlement issues.
Skydo as a Cross-Border Payment Aggregator (PA-CB) for Indian Exporters
Skydo is an RBI-authorised Payment Aggregator-Cross Border (PA-CB) built for Indian businesses and freelancers receiving payments from overseas clients. Unlike domestic payment aggregators that focus on INR collections, PA-CBs are specifically regulated to facilitate eligible cross-border payment transactions. Skydo received its full PA-CB authorisation in January 2026. It comes with:
- Flat Transparent Fees: Skydo charges $19 on payments under $2,000, $29 from $2,001–$10,000, and 0.3% above $10,000, with zero FX markup at the mid-market rate.
- Free Virtual Accounts: Exporters can receive payments through virtual accounts in USD, EUR, GBP, SGD, AUD and CAD, allowing overseas clients to pay through local-style bank details.
- Instant FIRA: Skydo generates a free FIRA automatically with every payment, providing documentation of the inward remittance.
- eBRC and EDPMS Support: For applicable goods exports, Skydo supports shipping-bill and IRM reconciliation and eBRC-related processes, helping exporters complete their export documentation.
- 24-hour Settlement: Payments are settled to the Indian bank account within 24 hours.
- Simple Setup: There is no setup fee or monthly fee, and Skydo says initial setup takes about 5 minutes.
- India-Based Support: Customers can access India-based support through WhatsApp and phone.
The real test of a payment aggregator is what happens when a payment does not go as planned. Before you sign up, check how they handle failed payments, disputes, refunds and delayed settlements. Those processes matter just as much as the checkout experience.
Is Google Pay a payment aggregator?
Google Pay is primarily a consumer-facing UPI app, but its underlying entity, Google India Digital Services Private Limited, is also an RBI-authorised Online Payment Aggregator. Its consumer UPI service and merchant payment-aggregation activity are therefore separate functions.
Which payment aggregators are approved by the RBI?
What is a payment aggregator license and who needs one?
What is the minimum capital requirement for a payment aggregator in India?
Can a domestic payment aggregator handle international payments?
What documents does an Indian exporter need after receiving an international payment?
