With the September 15 deadline approaching, thousands of merchants face potential service interruptions as payment platforms struggle to meet stringent KYC verification requirements mandated by the Reserve Bank of India (RBI).
As reported by MoneyControl, it is estimated that approximately 30-35 percent of small-scale offline merchants deploying QR codes for UPI payments may fail to meet the regulatory timeline. This stringent compliance mandate encompasses all merchant categories, including online, offline, and cross-border service providers. Many million small online business entities are also at risk of missing the verification window.
The KYC backlog follows the RBI’s updated and consolidated Master Directions, issued in September 2025, which formally categorise payment aggregators into three segments: PA-Online, PA-Physical and PA-Cross Border.
The central bank also set a September 15, 2026 deadline for payment aggregators to complete full re-KYC verification of existing merchants, failing which their payments will be paused.
For merchants onboarded on or after January 1, 2026, verification was required before they could accept payments.
Industry executives said the compliance process is particularly challenging for small and informal businesses that often lack the required documentation. Many local retailers and small shop owners using QR-code stands may not be familiar with the detailed requirements.
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