A payment gateway is the technology that securely carries payment details between the customer, the merchant and the banks. A payment aggregator goes further: it onboards merchants, receives the customer's money and settles it to the merchant. In India, non-bank payment aggregators need RBI authorisation, while pure payment gateways are treated as technology providers.
People use "payment gateway" and "payment aggregator" as if they mean the same thing. In everyday talk, that is mostly harmless. But when you are signing a merchant agreement, checking a provider's regulatory status or planning a multi gateway setup, the difference matters.
What is a payment gateway?
A payment gateway is the technology that carries a payment request from the customer to the banks and brings the result back. It encrypts card or account details, shows the checkout or redirects to the UPI app or bank page, and tells the merchant whether the payment worked. Think of it as the secure pipe. On its own, a pure gateway does not hold the merchant's money.
What is a payment aggregator?
A payment aggregator does the gateway's job and more. It onboards merchants, collects the money customers pay into its own account, and then settles it to each merchant after deducting its fees. Because it handles funds on behalf of many merchants, it carries more risk and is regulated more tightly.
This is why a small business can sign up online with a well-known provider and start receiving payments within days, without opening a separate merchant account with a bank. The provider is acting as an aggregator.
How does RBI regulate payment aggregators and gateways?
In March 2020, the Reserve Bank of India issued its Guidelines on Regulation of Payment Aggregators and Payment Gateways. The key points for merchants are:
- Non-bank payment aggregators must be authorised by RBI under the Payment and Settlement Systems Act, 2007. Banks can act as aggregators without separate authorisation.
- Payment gateways that only provide technology are treated as technology providers. They do not need authorisation as aggregators, though RBI recommended baseline technology and security practices for them.
- Aggregators have to meet net worth requirements (₹15 crore when applying and ₹25 crore by the end of the third financial year) and keep customer funds in an escrow account with a scheduled commercial bank.
- Aggregators are responsible for KYC and background checks on the merchants they onboard.
RBI has since issued further directions, including rules for cross-border and offline payment aggregators, so check the latest master directions and the list of authorised payment system operators on the RBI website before choosing a provider.
Payment aggregator vs payment gateway: key differences
| Point | Payment gateway | Payment aggregator |
|---|---|---|
| Main role | Technology that carries the payment | Collects and settles money for merchants |
| Handles funds | No | Yes, through an escrow account |
| RBI authorisation (India) | Not required as a pure technology provider | Required for non-bank entities |
| Merchant onboarding and KYC | Usually done by the bank or aggregator behind it | Done by the aggregator |
| Who settles money to you | Your acquiring bank | The aggregator |
| Typical user | Large merchants with their own bank tie-ups | Small and mid-sized online businesses |
Which one does your business need?
If you are a small or growing business, you are almost certainly working with a payment aggregator, even if its website calls it a payment gateway. That is fine. What you should check is that it is authorised by RBI or has a valid application in process, and that its settlement timelines and charges suit you.
Very large merchants sometimes build direct relationships with acquiring banks and use a pure gateway on top. That route needs more negotiation and compliance work, and only makes sense at high volume.
Where does a multi PG platform fit?
A multi PG platform is a layer above your gateways and aggregators. It does not replace them. It gives you a single integration, decides which provider handles each payment, and collects the results in one place. The money still flows through the regulated gateways, aggregators and banks underneath.
That is how JustPe Multi PG works: you keep relationships with the providers you trust, and add routing, failover and a single view on top. To see how the routing decision is made, read what is payment routing, or compare single vs multiple payment gateways.
Frequently asked questions
Is Razorpay a payment gateway or a payment aggregator?
Most well-known Indian providers that let small businesses sign up online and receive settlements, Razorpay included, work as payment aggregators and also provide the gateway technology. The simple test is who settles the money to you: if the provider does, it is acting as an aggregator.
Does a payment gateway need an RBI licence?
Under RBI's 2020 guidelines, entities that only provide payment gateway technology without handling funds do not need authorisation as payment aggregators. RBI did suggest baseline technology and security practices for them. Non-bank payment aggregators that handle funds must be authorised under the Payment and Settlement Systems Act, 2007.
Where does a multi PG platform fit in?
A multi PG platform sits on top of your gateways and aggregators. It decides where each payment should go and gives you one integration and one view of transactions, while the money still moves through the underlying regulated gateways and banks.
