The landscape of digital payments in India has witnessed a major development this week. The Reserve Bank of India (RBI) has granted critical regulatory approvals to leading fintech players, reshaping how “Payment Gateways” and “Payment Aggregators” operate in the country.
In a significant boost for merchants and small businesses, Razorpay and PayG have officially secured licenses to operate as Offline Payment Aggregators (PA-P). This move is set to bridge the gap between online and offline commerce, allowing businesses to use a single “gateway” for all their transaction needs.
This article breaks down what these new licenses mean, the difference between online and offline gateways, and how this impacts the Indian economy in 2026.
Razorpay POS: Now a Fully Licensed Offline Aggregator
On January 24, 2026, Razorpay announced that its offline arm, Razorpay POS, received the final authorization from the RBI to operate as a Payment Aggregator – Physical Point of Sale (PA-P).
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Why is this important?
Previously, Razorpay was primarily known as an online payment gateway (PG) for websites and apps. With this new PA-P license, Razorpay can now officially:
- Deploy card swipe machines (POS terminals) and QR codes at physical retail shops.
- Onboard offline merchants directly under RBI regulations.
- Offer a “Unified Payment Experience” where a shopkeeper can track both their website sales and in-store counter sales on one dashboard.
Razorpay now holds all three critical licenses: Online PA, Cross-Border PA, and Offline PA (PA-P), making it a dominant force in India’s fintech sector.
PayG Completes its License Suite
In another major update from January 10, 2026, Hyderabad-based payment solutions provider PayG announced that it has also received RBI approval for both Offline and Cross-Border Payment Aggregation.
For PayG, this is a milestone moment. It allows the company to support Indian merchants who want to sell goods globally (Cross-Border) while also managing local store payments (Offline). This is particularly beneficial for export-oriented businesses and MSMEs looking for affordable gateway solutions.
Context: The RBI’s “Clean Tech” Drive
The RBI has been extremely strict with payment gateways since 2024. The central bank stopped onboarding new merchants for several major players until they met strict compliance norms regarding data security, net worth, and anti-money laundering (AML) checks.
The granting of these fresh licenses in January 2026 signals that the RBI is confident in the compliance standards of these fintech firms. It marks the end of a long regulatory “cleanup” phase and the beginning of aggressive expansion for digital payments in India.
Impact on Indian Merchants
For the average shopkeeper or business owner in India, this news brings three key benefits:
- Simpler Management: You no longer need one vendor for your website payment gateway and a different bank for your shop’s card machine. One company can handle both.
- Faster Settlements: Integrated gateways often promise faster settlement cycles (money reaching your bank account).
- Global Reach: With Cross-Border licenses (like PayG’s), small Indian sellers can easily accept payments from customers in the USA, UK, or Dubai without complex banking paperwork.
What Happens Next?
- Market Competition: Expect a price war. With Razorpay, PayG, Cashfree, and Pine Labs all vying for the “omnichannel” merchant, transaction fees (MDR) for offline machines might drop.
- New Features: Companies will launch “Smart POS” devices that not only accept payments but also manage inventory and GST billing.
- Expansion: These companies will now aggressively hire and expand into Tier-2 and Tier-3 cities, pushing digital adoption further into rural India.
Frequently Asked Questions (FAQs)
Q1: What is a Payment Gateway?
A payment gateway is a technology service that acts as a bridge between a merchant (seller) and a customer’s bank. It securely transmits payment data to authorize a transaction, whether online (website) or offline (POS machine).
Q2: What is the difference between Online PA and PA-P?
Online PA: Handles payments on websites and apps (e.g., when you buy from Amazon or Zomato).
PA-P (Physical): Handles payments in physical stores using card machines and soundboxes.
Q3: Is Razorpay safe to use for my shop?
Yes. The recent RBI license confirms that Razorpay meets the government’s strict security and financial standards.
Q4: Can I accept international payments with these gateways?
Yes, if the provider has a “Cross-Border” license (like PayG or Razorpay), you can accept payments from foreign cards and customers easily.
Q5: Are there other companies with these licenses?
Yes, other major players like Pine Labs, MSwipe, and Innoviti also operate in the offline payment space. The new licenses just add more competition and options for you.