Millions of merchants across India could face trouble with digital payments if they fail to complete their re-KYC on time.
The September 15, 2026 deadline set by the Reserve Bank of India (RBI) is quickly approaching.
Payment aggregators are required to complete detailed verification of merchants under the new rules.
If the required verification is not completed, a merchant’s online payment collection services could be stopped.
Reports suggest that more than 1 million online merchants and around 30% of small businesses using UPI QR codes are yet to complete the process.
Why Is Re-KYC Becoming a Big Challenge?
The RBI updated its Master Directions in September 2025 and introduced separate rules for online, physical and cross-border payment aggregators.
Under the updated system, simply uploading documents is no longer enough.
Payment companies have to verify important details about the merchant, including the business, ownership and background.
The verification requirement already applies to merchants who joined the digital payment system from January 1, 2026.
Now, older merchants have to complete the process by September 15.
The combination of paperwork, verification requirements and last-minute delays is making the process difficult for both payment companies and merchants.
Physical Verification Adds to the Pressure
One of the biggest changes is that, in many cases, payment companies must physically verify the merchant’s business location.
This means a representative may have to visit the shop or business premises and check the original documents.
The process cannot simply be handed over completely to a third-party agency. Payment companies may need to use their own employees for these checks.
For companies with thousands of merchants spread across cities, towns and villages, this has created a major operational challenge.
It also means higher costs and more time to complete the verification before the deadline.
Small Traders Could Face the Biggest Trouble
Small shops, individual traders and informal businesses may be among the most affected.
Many of these businesses do not have the same paperwork as large companies.
Documents such as incorporation papers, detailed ownership records, tax documents or formal business address proof may not always be available.
Some merchants may also find terms such as beneficial ownership difficult to understand.
This is creating additional hurdles for businesses that have only recently started accepting digital payments.
Payment Companies Are Now Helping Merchants
Payment aggregators are not just collecting documents anymore. Many are also helping merchants understand the re-KYC requirements.
Companies are explaining which documents are needed, helping correct incomplete information and following up with merchants who have not completed the process.
But with the deadline getting closer, the pressure is increasing.
If a large number of merchants fail to complete their verification by September 15, their digital payment services could potentially be affected.
For small businesses that depend heavily on UPI and online payments, even a temporary disruption could create a serious problem.
With the deadline just days away, merchants should check their re-KYC status and complete any pending verification as soon as possible.
