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PA-CB and AD-II: Two Licenses, One Framework

Rakshatha Murching

25 Jun 2026 • 6 min read

A-CB and AD-II: Two Licenses One Framework

How India's cross-border payment landscape quietly converged under GIFT IFSC

India's cross-border payment stack is built around specialization. Different licenses for different use cases, each with its own regulator, its own obligations, and its own scope. The license an entity holds determines what it can do, who it can serve, and how far it can go. PA-CB and AD-II are two of those pieces. They were designed for different problems, serve different customer types, and sit under different rule books. But walk into GIFT City, and that distinction quietly disappears. Under the IFSCA Payment Services Regulations 2024, both categories end up at the same place: a Payment Service Provider license.

To understand why that matters, let’s dive into what each of them actually means.

What is a PA-CB?

PA-CB stands for Payment Aggregator Cross Border. The RBI created this category in October 2023, through a circular that essentially ended the era of the OPGSP.

Before that circular, companies facilitating cross-border payments online operated as OPGSPs (Online Payment Gateway Service Providers) under a 2015 framework. An OPGSP didn't need its own RBI license; it just needed a tie-up with an Authorized Dealer Category-I bank. The bank held the regulatory accountability, and the payment company operated behind it. As cross-border volumes grew, RBI moved toward bringing these entities under direct oversight, which is what the 2023 circular did.

So in 2023, RBI established direct oversight for all entities in this space. Non-bank entities facilitating cross-border online payments for import or export of goods and services now needed direct authorization from RBI to operate as PA-CBs. Entities operating through bank tie-ups had to either obtain their own authorization or wind down their cross-border payment operations.

Along with that came a comprehensive set of obligations. PA-CBs were classified into three types: export only, import only, or both, each with its own separate collection accounts. The transaction cap was set at ₹25 lakh per unit of goods or services (a significant upgrade from the old OPGSP import cap of $2,000). Import scope was extended to cover services, not just goods. Net worth requirements were introduced at ₹15 crore, rising to ₹25 crore by March 2026. And compliance obligations from the 2020 PA-PG guidelines, KYC norms, FIU-IND registration, the full stack, all became mandatory.

The net effect was that PA-CB gave cross-border payment companies their own regulatory standing as first-class regulated entities. They were now directly answerable to RBI as payment system operators under the Payment and Settlement Systems Act, 2007.

What is an AD-II?

Authorized Dealer Category II is a much older construct. It's an RBI authorization under FEMA, issued primarily to Full-Fledged Money Changers (FFMCs), certain NBFCs, and cooperative banks, allowing them to deal in foreign exchange for a specific set of non-trade current account transactions.

Think of it as the license that powers a forex counter at an airport, helps students remit fees abroad, or issues prepaid forex cards to travelers. The permitted activities cover overseas education payments, international travel, medical treatment abroad, visa fees, crew wages, employment processing fees, subscriptions to international organizations. All personal, non-commercial use cases.

What AD-II entities explicitly cannot do is aggregate or process e-commerce import and export payments. That's PA-CB territory. An AD-II holder is not authorized to intermediate between an Indian merchant and a foreign buyer, or between a foreign seller and an Indian importer doing business online. The two licenses were separated by a hard wall, and that wall was intentional.

RBI's December 2023 draft on rationalizing the authorized dealer framework did propose expanding AD-II scope to include trade-related transactions up to ₹15 lakh and some additional forex services, but as things stand today, the two categories remain structurally distinct on the mainland.

Before GIFT IFSC: Two Separate Lanes

The clearest way to see the separation is side by side:

Dimension	PA-CB	AD-II
Regulated under	Payment and Settlement Systems Act, 2007	FEMA, 1999
Primary use case	Online cross-border import/export payments	Personal forex: travel, education, medical
RBI authorization	Required (since Oct 2023)	Required
Can aggregate merchant payments?	Yes	No
Tied to AD-I bank?	Yes (for collection accounts)	Yes (for forex settlement)
Can issue forex cards?	No	Yes
Operates physically?	No (online only)	Often yes (forex counters)

An AD-II entity that wanted to get into cross-border e-commerce payments had to build a separate PA-CB structure from scratch. A PA-CB that wanted to issue travel forex cards had to build or partner with a separate AD-II entity. These were additive licenses, not interchangeable ones. An entity needed both to play the full game, and very few players had the regulatory footprint to do that.

Why They're the Same Under IFSCA

On January 29, 2024, IFSCA notified the Payment Services Regulations 2024 for GIFT IFSC. These regulations created a single license category called Payment Service Provider, or PSP.

A PSP at GIFT IFSC can be authorized to provide any combination of five services: account issuance (including e-money accounts), e-money issuance, escrow, cross-border money transfer, and merchant acquisition. That list covers both what a PA-CB does and what an AD-II does.

Here's the thing about IFSCA's PSP framework: it doesn't distinguish by mainland category. It doesn't ask whether an applicant is a PA-CB entity or an AD-II entity. The eligibility criteria are the same for everyone. A company sets up a subsidiary in GIFT City, applies for PSP authorization from IFSCA, and if it meets the requirements, it gets the same certificate as everyone else. A remittance house with an AD-II license and a cross-border fintech with a PA-CB license are both applying for the exact same thing.

The first full PSP license under the IFSCA Payment Services Regulations 2024 was granted to Glomo in October , 2025, making it the first entity to receive complete PSP authorization at GIFT IFSC. The four services covered, account issuance, e-money issuance, merchant acquisition, and cross-border fund transfers, span capabilities that on the mainland sit across two separate license categories. At GIFT IFSC, they sit under one.

What Was Different Before AD-II Came Into the Picture

For a long time, GIFT IFSC's payments story was essentially a PA-CB story. The assumption in the industry was that IFSCA's PSP pathway was a natural extension of the PA-CB world, a way for RBI-authorized payment aggregators to set up an offshore leg at GIFT City for international flows. The dual structure being discussed was always PA-CB on the mainland plus IFSCA PSP in GIFT City.

AD-II entities weren't part of that conversation. They had a different customer base, a strong physical distribution footprint, and their existing business was primarily domestic-facing. Their strength was in foreign exchange services for individuals, not cross-border digital infrastructure for merchants.

What the IFSCA framework signals is that it's genuinely inclusive. It's a convergence point for any regulated entity in the payments and forex space, regardless of how they came to be regulated. A company that built its business on airport forex kiosks and travel money can now offer the same internationally scalable payment services as a cross-border fintech, from the same legal base in GIFT City.

That's what makes GIFT IFSC's unified approach a meaningful evolution of India's payments infrastructure.

What the Future Looks Like

Glomo's approval will not be the last of its kind. Large FFMCs and remittance businesses with established AD-II licenses are now watching closely. GIFT IFSC's tax advantages, globally-aligned regulatory framework, and access to international flows make the economics of setting up a PSP subsidiary increasingly compelling for any AD-II entity with cross-border ambitions.

On the PA-CB side, the dual operating model is becoming standard thinking: maintain a mainland RBI license for domestic payment legs, and an IFSCA PSP license for international ones. That's not a future scenario. It's what serious players are already building toward.

Further out, there's a question of whether the mainland itself starts to close the gap. RBI's December 2023 draft on authorized dealer rationalization proposed expanding AD-II scope to allow trade-related transactions and broader forex services. If that gets finalized, the boundary between PA-CB and AD-II capabilities could begin to ease onshore too. The convergence that's already happened at GIFT IFSC could slowly migrate back to the mainland.

The broader shift is worth naming plainly. India's cross-border payment regulation has evolved through specialization, with distinct licenses for distinct purposes, each carefully scoped and supervised. GIFT IFSC, through a single PSP license, is now creating a unified layer on top of that structure, one where the category an entity holds on the mainland doesn't determine what it can do internationally. PA-CB or AD-II, once inside GIFT IFSC, it's just a PSP. That's a meaningful change, and it's only just beginning.

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