AHMEDABAD: The International Financial Services Authority (IFSCA) recently issued new regulations for fintech entities in GIFT IFSC willing to offer payment services in GIFT City. Over and above approval from the Reserve Bank of India (RBI), merchant payment services providers will also need approval from the IFSCA through a separate licence.
At present, these platforms are regulated by the RBI as far as transactions within India are concerned. Cross-border transactions on such platforms are considered under the Payments and Settlement Systems Act. The regulation will enable fintech entities in GIFT IFSC to offer their products across the globe.
“The new laws enable payment aggregators to set up base in GIFT City and streamline cross-border payments. For instance, if a foreign student wants admission to a university on the GIFT City campus, the only option for fee payment is a bank transfer. This is the same for business-to-business transactions as payment gateways are not authorized to process cross-border payments,” said a senior executive at IFSCA.
“With more payment service providers enabling cross-border payments, international transactions will be possible through various modes such as online payments or through credit and debit cards and e-wallets. This will go a long way in simplifying business-to-business and business-to-consumer transactions at GIFT IFSC,” the executive explained.
The guidelines notified as IFSCA (Payment Services) Regulations 2024, are applicable to five types of businesses: cross-border money transfer, account issuance, escrow services, e-money issuance service and merchant acquisition services. A report by PricewaterhouseCoopers stated India’s cross-border remittances have been growing at a CAGR of 8% since 2016, driven by the rise in global mobility of goods and services, international travel, and international workforces.
Merchant payment services offer businesses payment options in several modes such as online banking, credit cards, debit cards and wallets, among others. At least 20 banks have an IFSC Banking Unit at the GIFT SEZ. Paytm also announced an investment of Rs 100 crore to set up a cross-border payments platform at GIFT.
