How to Start Payment Gateway Business in India – Complete RBI & Compliance Guide (2026)
Starting a payment gateway business in India is one of the fastest-growing opportunities in the fintech sector. With the rise of digital payments, e-commerce, and UPI transactions, payment processing businesses have massive growth potential.
However, payment gateways are regulated by the Reserve Bank of India and require strict compliance.
If you are planning to start a payment gateway business in India, this guide explains the legal structure, RBI approval process, capital requirements, compliance norms, and business model.
What is a Payment Gateway?
A payment gateway is a technology platform that enables merchants to accept online payments through:
- Debit cards
- Credit cards
- UPI
- Net banking
- Wallets
It acts as a bridge between:
Customer → Merchant → Bank
Is RBI Approval Required?
Yes.
Under RBI regulations, payment aggregators and payment gateways must obtain authorization under the Payment and Settlement Systems Act, 2007.
If operating as a Payment Aggregator (PA), RBI approval is mandatory.
Step 1: Decide Business Model
There are two models:
1️⃣ Payment Gateway (Technology Service Provider)
- Provides technology platform
- Does not handle funds directly
2️⃣ Payment Aggregator (PA)
- Collects funds from customers
- Settles funds to merchants
- Requires RBI license
Payment Aggregator requires stricter compliance.
Step 2: Incorporate a Company
You must incorporate:
- Private Limited Company under Companies Act, 2013
Object clause must clearly mention:
- Payment processing
- Financial technology services
- Online transaction services
Step 3: Minimum Capital Requirement
For Payment Aggregators:
- Minimum Net Owned Fund (NOF) requirement as per RBI guidelines
(Generally ₹15–25 Crore depending on timeline & compliance stage)
Capital must be:
- Fully paid-up equity
- Properly documented
- Free from encumbrances
Step 4: Apply for RBI Authorization
Application is filed with RBI including:
- Business plan
- Technology architecture
- Cybersecurity policy
- KYC & AML policy
- Merchant onboarding framework
- Risk management system
RBI performs detailed scrutiny before granting approval.
Step 5: Compliance Requirements
Payment gateway businesses must comply with:
- RBI guidelines
- KYC norms
- Data localization rules
- Cybersecurity framework
- PCI-DSS standards
- Regular reporting
Non-compliance may lead to heavy penalties.
Technology & Infrastructure Requirement
A payment gateway business must have:
- Secure server infrastructure
- Fraud detection system
- API integration capabilities
- 24/7 transaction monitoring
- Data encryption
Fintech compliance is heavily technology-driven.
Cost to Start Payment Gateway Business in India
Estimated investment includes:
- Capital requirement (₹15–25 Crore for PA)
- Technology development
- Compliance & legal fees
- Office & manpower cost
This is a high-investment business model.
Timeline for RBI Approval
RBI approval can take:
6 to 12 months (or more depending on scrutiny)
Strong documentation reduces delay.
Revenue Model of Payment Gateway
Revenue is earned through:
- MDR (Merchant Discount Rate)
- Transaction fee
- Setup fee
- Annual maintenance fee
- Value-added services
Scalability is high once network is established.
FAQs – How to Start Payment Gateway Business in India
Is RBI license mandatory?
Yes, for Payment Aggregators.
What is minimum capital required?
Generally ₹15–25 Crore for PA model.
Can startup apply?
Yes, if capital & compliance conditions are met.
Is fintech regulated in India?
Yes, heavily regulated by RBI.
