The International Financial Services Centres Authority (“IFSCA”), exercising its powers under Section 18 of the Payment and Settlement Systems Act, 2007 (“PSS Act”) and Section 13 of the International Financial Services Centres Authority Act, 2019, vide E. File. No. IFSCA-FMPP0BR/3/2023-Banking,[1] dated June 06, 2025, has issued a policy framework governing the participation of Payment Service Providers (“PSPs”) in international payment systems.
I. Participation in International Payment Systems
PSPs intending to participate in or become members of international payment systems for the purpose of making or receiving payments to or from banks or financial institutions located outside the International Financial Services Centre (“IFSC”) must obtain prior approval from the IFSCA.
II. Authorisation for Systems Affecting Domestic Transactions
If an international payment system allows PSPs or financial institutions within IFSC to make or receive payments amongst themselves, and such activity effectively impacts domestic (i.e., IFSC-based) transactions, that system must obtain authorisation from the IFSCA under Section 7(1) of the PSS Act. This condition applies even if the payment system itself is international, provided its operation affects domestic payments within the IFSC jurisdiction.
III. PSP Participation Within IFSC Using International Systems
PSPs that wish to use an international payment system for making or receiving payments with other PSPs or financial institutions within the IFSC must ensure that the international payment system complies with the authorisation requirement stated above. In addition, the PSP must obtain prior approval from the Authority before participating in such systems. This two-fold compliance ensures regulatory oversight of all payment flows affecting the IFSC environment, even if intermediated by foreign systems.
IV. Compliance Review and Reporting Obligations
Further, the Authority hereby directs every PSP to review its participation in the international payment systems in light of the aforementioned policies and intimate the Department of Banking Supervision about its compliance with the same within 30 days from the date of this circular and also share with the Authority a list of all the international payment systems in which the PSP was participant, as on May 31, 2025
[1]https://ifsca.gov.in/Viewer?Path=Document%2FLegal%2Fcircular-participation-of-psps-in-international-payment-systems06062025063350.pdf&Title=Participation%20of%20Payment%20Service%20Providers%20%28%E2%80%9CPSPs%E2%80%9D%29%20in%20international%20payment%20systems&Date=06%2F06%2F2025