NPCI issues guidelines for merchant acquisition on BHIM Aadhar Pay
Sambhajinagar, May 8, 2024
BHIM Aadhaar Pay enables merchants to receive digital payments from customers over the counter through Aadhaar authentication, according to the NPCI website
The National Payments Corporation of India (NPCI), in a circular, has issued guidelines that put the onus of verifying merchant details on acquiring banks for BHIM Aadhaar Pay.
"The obligation to acquire, manage and monitor merchants for BHIM Aadhaar Pay rests with acquiring member banks. Acquiring member banks shall continue to be responsible for merchants onboarded by them directly or through aggregators/partners," said NPCI in the circular.
BHIM Aadhaar Pay enables merchants to receive digital payments from customers over the counter through Aadhaar authentication, according to the NPCI website.
The NPCI has issued these guidelines regarding an acquiring member bank’s key responsibilities and accountabilities when managing merchants.
NPCI has been issuing advisories to curb the rising number of frauds using Aadhaar-enabled payment systems (AePS). It has advised members to assign an appropriate merchant category code (MCC) when onboarding merchants. They are required to ensure that cash withdrawal transactions are not allowed on the BAP service’s merchants, and banks must maintain oversight of such merchants.
The obligation to acquire, manage and monitor merchants for the BAP service rests with acquiring member banks.
An acquiring member bank is required to monitor merchant activity such as onboarding criteria, transaction monitoring and control, and training, among others. This acts as oversight for merchant performance and due diligence.
Similarly, the guidelines state that the banks should ensure a board-approved policy is in place for merchant acquisition. "A proper process on the merchant acquisition and portfolio monitoring, along with the necessary due diligence, should be in place to mitigate risks," said the circular.
Other aspects, such as merchant underwriting, merchant portfolio and risk monitoring, and training, are adequately addressed by acquiring member banks.
They are required to conduct reviews or audits of the third parties that are engaged by the merchants.
Merchants associated with any acquiring bank live on BHIM Aadhaar Pay can accept payment from customers of any bank by authenticating their biometrics.
Live member banks on the service include payments banks, small finance banks, cooperative banks, regional rural banks, and mainline commercial banks.
[The Business Standard]
