Indian Railways‘ ticketing and hospitality arm IRCTC is likely to receive in-principle approval from the Reserve Bank of India (RBI) in two to three months to provide payment aggregation services.
The state-run company is also hoping that the final approval will come within a year, according to management commentary during an analyst call, following its fourth quarter (Q4FY25) results.
If approved, the licence will bring in additional revenues for the railway PSU by acting as an intermediary between merchants and customers, facilitating the process of payments.
The RBI has in February 2023 turned down an application from IRCTC for licence to provide payment aggregation services.
Payment aggregator business is currently dominated by innovate start-ups, and to make a headway, IRCTC will have to rely on government entities and vendors within the railways ecosystem, at least in the initial period.
“The approval would create a new revenue stream for the company. Payment aggregation is a business of scale and operates on thin net take rates. However, IRCTC could tap government entities and freight-related transactions of railways in the initial phase,” said Jinesh Joshi, lead analyst at Prabhudas Lilladher.
Payment aggregators are third-party service providers who help businesses accept online payments by consolidating multiple payment methods into a single platform.
Another brokerage IDBI Capital said that the RBI’s possible grant of payment aggregator licence could bolster IRCTC’s revenues from FY27 onwards.
Over the past 2-3 years, the company has been putting together a plan to diversify into the fintech player. For instance, to streamline its payment vertical, it formed a subsidiary – IRCTC Payments – last year. The subsidiary’s purpose is to “evolve into an innovative, technology-driven fintech company, delivering payment aggregator solutions beyond IRCTC to both government and non-government agencies outside the IRCTC ecosystem”. Then in April this year, the PSU floated a tender to rope in a technical service provider to assist in providing end-to-end payment services.
To be sure, IRCTC already operates its own payment gateway – iPay – which is serving its own customer base. iPay offers different payment modes, including a unique feature “Auth & Capture/One-time Mandate” wherein users can authorise payments from their UPI bank account or other payment instruments, creating a lien on their payment instrument. In a situation where the payment gets deducted from the account without ticket confirmation, the blocked amount is released within 30 minutes of the transaction so that user can re-book.