What Is a Payment Gateway?

A payment gateway is the technical layer that carries payment details from a customer's checkout page to the banks and networks that approve the payment. Under RBI's wording, a gateway does not handle the funds itself. A payment aggregator is different: it collects the money and then settles it to the merchant. In everyday use the two roles are often sold together by one provider, so the word gateway is used loosely. For an exporter this matters, because the entity that holds the funds decides settlement timing, documents and compliance, and RBI regulates cross-border aggregators separately.

For example, a Jaipur design studio adds an online checkout to its website so a client in Germany can pay a EUR 800 invoice by card. The gateway routes the card details for approval. The funds are then collected and settled to the studio's account by a regulated entity, under the terms of the studio's agreement.

• Bank compliance: RBI separates gateways, which do not handle funds, from aggregators, which do. Cross-border collection for exports is covered by the PA-CB framework, explained in what is PA-CB.
• Export reporting: Export proceeds still have to be realised and reported as the 2026 export regulations require, whichever route brought the money in. See what is EDPMS.
• GST: Fees charged by a gateway or aggregator can attract GST. See GST on payment gateway charges.
• Income tax: Gateway fees are a business cost, and the net amount credited may differ from the invoice. Record both amounts and ask a chartered accountant how to book them.

A gateway sits between the checkout page and the banks, passing encrypted payment details so that the payment can be approved or declined.

1. The client enters payment details on the merchant's checkout page.
2. The gateway sends the details to the relevant bank or network for approval.
3. The bank or network replies with an approval or a decline.
4. The gateway returns the result to the merchant's page.
5. The collected funds are settled to the merchant by the entity that handles them, within the period agreed in the contract.

Confirm who actually handles the money, whether that entity is authorised by RBI for cross-border collection, and what the agreement says about settlement and fees.

1. Ask whether the provider only routes payments or also collects and settles funds.
2. If it collects cross-border funds, check the provider against RBI's list of applications and authorisations. See how to check an RBI authorised payment aggregator.
3. Read the agreement for the settlement timeline, fees, refund and dispute terms.
4. Check the currency in which the client pays and the rate used to convert it.
5. Confirm that you will receive a document for each credit that you can match with the invoice.

A payment gateway provides technology to route a payment without handling funds. A payment aggregator facilitates aggregation of payments and settles the collected funds to merchants. RBI regulates aggregators directly, so the difference decides which rules apply.

• Same as aggregator: RBI defines them separately. One company can offer both services, so check which entity settles your funds.
• Any gateway works: For cross-border collection, the entity handling funds should be authorised. Check RBI's published list.
• No export reporting: Money received through a gateway route is still export proceeds if it pays an export invoice, and it must be realised and reported.
• Instant credit: Settlement time depends on the agreement and the processing chain. See what is settlement period.
• Fees are fixed: Fees, currency conversion margins and dispute charges vary by provider. Read the agreement before accepting payments.

• Payment aggregator (PA-CB): An entity authorised to collect cross-border payments and settle them to merchants.
• Settlement period: The time between a payment being made and the funds being credited to the merchant.
• Chargeback: A reversal of a card payment after the cardholder disputes it.
• FX markup: The margin added over the benchmark rate on currency conversion.
• FIRA: Foreign Inward Remittance Advice, a record of a foreign credit.

Every rule and definition on this page is linked to its official source, checked on the dates below.

1. RBI Master Direction on Regulation of Payment Aggregators (PA), Chapter I, definitions of Payment Aggregator and Payment Gateway (checked 9 Oct 2026)
2. RBI, Regulation of Payment Aggregator - Cross Border, PA-CB framework (checked 9 Oct 2026)
3. RBI, Status of applications received from Payment Aggregators (checked 9 Oct 2026)
4. Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (checked 9 Oct 2026)