Payment aggregator regulation upheld: statutory payment system coverage, net worth criteria, and escrow safeguards were sustained.

A payment aggregator was held to fall within the statutory concept of a payment system under the Payment and Settlement Systems Act, 2007, so RBI could insist on authorisation for its operation. The Court also upheld the Clause 4 minimum net worth requirement in the 2020 Guidelines, treating it as a rational eligibility measure linked to financial soundness, customer protection, and operational viability rather than arbitrary classification. Clause 8 on maintaining collected funds in an escrow account was likewise sustained as consistent with the Act's express power to require separate accounts and protect beneficiary funds. The guidelines were upheld in substance.

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Issues: (i) Whether a payment aggregator falls within the expression "payment system" under the Payment and Settlement Systems Act, 2007, and whether RBI can require authorisation for its operation; (ii) Whether the net worth requirement in Clause 4 of the 2020 Guidelines is arbitrary or violative of constitutional guarantees; (iii) Whether the escrow account requirement in Clause 8 of the 2020 Guidelines is ultra vires or otherwise invalid.

Issue (i): Whether a payment aggregator falls within the expression "payment system" under the Payment and Settlement Systems Act, 2007, and whether RBI can require authorisation for its operation.

Analysis: The expression "payment system" in Section 2(1)(i) of the Payment and Settlement Systems Act, 2007 is wide enough to cover a system that enables payment between a payer and a beneficiary, including clearing, payment or settlement services. A payment aggregator accepts funds on behalf of the merchant, routes them through the payment flow, and facilitates settlement to the merchant account. The Court applied an updating construction to the statute, recognising that technology-driven payment services fall within the statutory scheme. Once the activity is treated as a payment system, RBI's regulatory powers under Sections 10(2) and 18, and the authorisation requirement under Section 4, are attracted.

Conclusion: A payment aggregator falls within the statutory ambit of a payment system, and RBI can require authorisation for its operation.

Issue (ii): Whether the net worth requirement in Clause 4 of the 2020 Guidelines is arbitrary or violative of constitutional guarantees.

Analysis: The minimum net worth condition was framed after a discussion paper was placed in the public domain and stakeholder feedback was considered. The Court treated the requirement as an eligibility criterion connected with financial soundness, customer protection, and operational viability. In regulatory matters of economic policy, the scope of judicial interference is limited where the decision is shown to have been deliberated upon and is not demonstrably arbitrary. The Court found the reduction of the originally proposed threshold to the impugned level to be a matter of regulatory calibration rather than irrational classification.

Conclusion: The net worth requirement in Clause 4 is not arbitrary or unconstitutional.

Issue (iii): Whether the escrow account requirement in Clause 8 of the 2020 Guidelines is ultra vires or otherwise invalid.

Analysis: Section 23A of the Payment and Settlement Systems Act, 2007 specifically authorises RBI to require monies collected by a designated payment system to be kept in a separate account with a scheduled commercial bank. The provision also protects the balance in such account by creating a statutory charge in favour of the persons entitled to payment and by restricting use of the funds to the permitted purposes. The Court held that Clause 8 accords with this statutory framework and enhances protection of customer and merchant funds. The additional flexibility later granted for another escrow account also addressed the concern about spreading risk.

Conclusion: The escrow account requirement in Clause 8 is valid and within RBI's powers.

Final Conclusion: The impugned guidelines were upheld in substance, and the writ petition failed.

Ratio Decidendi: A technology-based payment intermediary that facilitates collection and settlement of customer funds may fall within the statutory concept of a payment system, and RBI may regulate such entities through authorisation, capital adequacy, and escrow-account requirements where those measures are supported by the parent statute and are not shown to be arbitrary.

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