RBI’s 2025 Payment Regulations: What Businesses Must Know

Online payments have now become a mainstay in the Indian landscape.

According to The Business Standard, India recorded 208.5 billion transactions in 2024, out of which UPI accounted for 83% of all digital payments in India.To ensure that these rapidly growing payments are transparent, secure, and safe for consumers, the RBI is introducing new digital payment regulations.

Businesses must comply with these regulations to avoid legal and financial repercussions and build customer trust. It also helps companies and banks maintain operational efficiency. In 2024, RBI has issued key updates for tokenization, PAPG compliance, and licensing for the Fintech industry. This blog will help you understand the latest RBI payment regulations and their impact on businesses in 2025.

RBI’s Latest Guidelines on Digital Payments

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RBI’s new digital payments regulations focus on customer protection, the FinTech industry, and other key areas like compliance.

Below is a summary of the key points the document covers:

Cross-Border Payments

Introduction of an Additional Factor of Authentication (AFA) for international transactions.
Settling foreign currencies on Indian payment systems using bilateral and multilateral agreements.
Introducing CBDC (Central Bank Digital Currency) in India.

Domestic Payments and Transactions Processing

Exploring the feasibility of processing internationally processed digital payments in India.
Introducing the National Card Switch will enhance the competitiveness and efficiency of card-based transactions.
Switching to the ISO 20022 standard for the messages sent by the RBI-run payment system.
Introduction of a framework to process merchant transactions through payment systems instead of gateways.
Exploring using bank account numbers without bank IFSC to facilitate faster transactions.
Integration of all government payments and receipts via eKuber.
Ensuring complete interoperability amongst smart cards in various settings and use situations.

Payment Policies and Guidelines

Constitution of a PAC to assist the BPSS.
Review and development of a framework for all types of PPIs.
Mandating BNPL providers to follow set guidelines.
Assessing the effectiveness of the PIDF scheme and making adjustments in funding accordingly.
Evaluation of charges levied by Fis on merchants and customers.

Non-Bank Entities

Offline PAs may be brought under the ambit of these regulations.
BigTechs and FinTechs may also be included under this regulation.

Fraud Mitigation

Prescription of AFA forms to address concerns with OTP authentication.
Introduction of multifactor authentication and tokenization to protect consumers.
Compliance with the Personal Data Protection Bill.
Real-time tracking and resolution of consumer complaints.

PAPG Compliance and Its Impact on Businesses

PAPG (Payment Aggregators and Payment Gateways) must adhere to digital payment guidelines set by the RBI. This compliance ensures that the businesses that facilitate digital payments adhere to high standards and provide secure and transparent transactions.

The latest RBI payments vision 2025 has several guidelines for PAPG:

1. Payment Aggregators

Regulation and Oversight: PAs will be subject to more stringent oversight for the safety and security of transactions. The vision proposes audits, compliance checks, and adherence to anti-money laundering (AML) and Know Your Customer (KYC) norms.
Operational Guidelines: These will cover aspects such as customer onboarding, transaction processing, and dispute resolution. PAs must maintain a minimum net worth and adhere to capital adequacy norms.
Data Protection: Compliance with PDPB and other relevant data protection regulations will be mandatory.

2. Payment Gateways

Innovation and Technology: The emphasis will be on the development of advanced fraud detection and prevention mechanisms. PGs will be incentivized to invest in R&D for new payment solutions.
Interoperability: PGs are required to be interoperable with various payment systems. They are also needed to integrate with UPI and other national payment systems.
Customer Experience: The emphasis is on providing customers with fast, convenient, and reliable payment services. PGs will be encouraged to implement friendly UIs and efficient support mechanisms.

Tokenization Rules and Merchant Obligations

Tokenization is a security-focused process, and the RBI vision document for payments mandates several security compliances for merchants. Let’s see what they are:

Tokenization Rules

Implementation Guidelines: Payment networks, card issuers, and acquirers must implement tokenization solutions in compliance with RBI standards. Each card, token requestor, and device must have a unique token that cannot be reused.
Data Security: Token Service Providers (TSPs) must adhere to prescribed data security measures. They are required to undergo security audits and assessments. Storing and processing of tokenized data should be in accordance with PDPB and any relevant data protection regulations.

Merchant Obligations

Compliance Requirements: Merchants must work with PAPGs to implement tokenization solutions that meet RBI’s standards.
Data Protection: Merchants must undergo regular security audits and assessments to identify and mitigate potential vulnerabilities in the payment system.
Customer Experience: Merchants are required to ensure minimal disruption to customer services during the tokenization process. Merchants must also establish clear communication with customers to help them understand the benefits of tokenization.

Pine Labs Online’s tokenizer solution is excellent for empowering merchants to create secure payment systems. Pine Labs Online’s tokenizer is RBI-compliant, masking customer data behind a token, which is then used for transactions.

How Businesses Can Stay Ahead of Regulatory Changes

Compliance is as important as ensuring secure transactions and excellent customer service. Here are a few best practices to keep you on track:

Policy Development: Develop comprehensive policies that outline all regulatory requirements for data protection, IT, and risk mitigation and introduce guidelines to stay updated.
Documentation: Document all your compliance activities, policies, procedures, initiatives, etc., to make audits easier.
Compliance Officer: Appoint a compliance officer who stays updated with regulatory changes and is responsible for compliance efforts.
Scheduled Audits: Conduct periodical internal and external audits to identify issues and fill the gaps.
Awareness Campaigns: Educate employees about the importance of compliance through internal flyers or training on regulatory mandates.
Technology: Leverage RBI-compliant technology providers like Pine Labs Online to gain access to tokenization solutions, payment gateways, and other RBI-compliant digital payment infrastructures.

Final Words

RBI’s latest digital payment regulations are a big step towards securing every transaction and ensuring a seamless customer experience. The vision emphasizes enhancing innovation and R&D in the payment gateway space, promising higher efficiencies and better flows.

The evolving digital payments ecosystem requires businesses to stay compliant at all stages to facilitate seamless transactions and avoid the risk of penalties.

Partnering with Pine Labs Online can help you achieve 100% compliance while providing secure and efficient payment solutions. This way, you can focus on growth while ensuring a smooth and secure payment experience for your customers.

Explore here for more information!