Open, a new business-to-business banking platform, has received in-principle approval from the Reserve Bank of India (RBI) for a Payment Aggregator (PA) license, the company said on November 14.

PAs provide payment services to merchants and e-commerce sites by accepting customers’ payment instruments. As part of the process, they pool the funds from customers and transfer them to the merchant after a certain time.

In a new set of guidelines in March 2020, the RBI required all PAs to be authorised by the central bank. The regulator has extended the deadline for non-bank companies offering PA services to apply for authorization until June 30 2021, and the deadline has been extended to September 30 2021.

Other players whose RBI has approved its license-in-principle include Razorpay, Pine Labs, Innoviti, Stripe, Cashfree, CCAvenue, MSwipe, NTT Data Payment Services, Easebuzz, and 1Pay Mobileware.

Founded in 2017 by Anish Achutan, Ajeesh Achutan, Mabel Chacko and Deena Jacob, Open focuses on SMEs, startups and freelancers, providing them with business checking accounts and automated accounting, bookkeeping, expense management, compliance and payroll One-stop service.

Like most fintech firms, Open operates as a technology platform, partnering with banks such as ICICI Bank, Axis Bank, Yes Bank, Equitas Small Finance Bank, Kotak Mahindra Bank and the National Bank of Mauritius, India, to deliver these services.

The startup also owns Zwitch, an end-to-end embedded financial platform that enables fintech and non-fintech companies to launch digital banking services. BankingStack is a cloud-native fintech operating system for financial institutions to launch digital banking solutions.

In addition to PAs such as Razorpay, CCAvenue, PayU, and BillDesk, many players such as PhonePe, BharatPe, Cred, Tata Group, Amazon, and Zomato have also applied for licenses.

PA is different from a payment gateway. Payment gateways provide businesses with technical services for processing transactions and are not involved in processing funds.

Without a license, e-commerce and other players either partner with banks that can aggregate payments on their behalf, driving up the cost of collection services, or rely on PAs, which bring more business to these licensed entities.