Multiple sources aware of the matter have disclosed that payment platforms Pine Labs, Razorpay & Stripe have received the RBI's in-principle approval for the payment aggregator's (PA) license.
Payment aggregators are entities that assist merchant and eCommerce websites to collect payments from their customers. This saves the merchants and eCommerce websites the effort of setting up their own payments system.
TCS Q1 results for the FY 2022-23 rose by 5.2%, read more.
These PAs are preferred by most entities since they are cheaper, faster, and a lot more user-friendly as opposed to banks that have high setup costs, and are fairly harder to integrate. PAs also provide analytics and data insights that are not available in bank PA platforms.
In March 2020, the RBI mandated all PAs to be authorized by it. This move made it necessary for all platforms like Razorpay, Stripe, and Pine Labs to acquire licenses to operate. All non-banking companies were required to apply for authorization by September 2021.
In the absence of a license, all merchants or websites will be compelled to use banks for collecting their payments, which would drive up collection costs and lead to possible inefficiencies.
According to the guidelines issued by RBI, existing PAs were required to achieve a net worth of Rs 15 crores by the end of FY21 and Rs 25 crores by the end of FY23. New PAs, on the other hand, were required to have a net worth of Rs 15 crores at the time of application and Rs 25 crores by the end of the third year from the grant of authorization. Moreover, those existing entities which could not comply with the net worth requirements by 31st March 2021, were told to "wind up their PA business".
In order to receive the license from RBI, these platforms need to conduct an audit within 6 months to get the Central Bank's final nod for the license, as is customary with all RBI licenses. The RBI or any of the aforesaid payment platforms have not said anything regarding this matter, but the RBI is expected to publish its list of authorized PAs soon.
Article by Aman Agarwal.
This news piece is brought to you in association with jobaaj.com