Definition
A sub-merchant is a business that accepts payments under a payment aggregator’s licence instead of directly onboarding with an acquiring bank.
How this works
The payment aggregator handles compliance, settlement, and reporting, while the sub-merchant focuses on selling products or services.
Benefits
• Faster onboarding
• Reduced compliance burden
• Access to payment infrastructure
FAQs
Do sub-merchants need RBI approval?
No. The payment aggregator holds regulatory responsibility.
Who manages settlements for sub-merchants?
The payment aggregator manages settlements.
Are sub-merchants allowed in marketplaces?
Yes. Marketplaces commonly operate using sub-merchant models.
Is KYC required for sub-merchants?
Yes. KYC is still mandatory.