Earlier this year, the RBI gave an in-principle nod to Razorpay and Cashfree for their payment aggregator (PA) license applications. Five months later, the central bank asked these companies and others to stop onboarding new merchants while it reviews their PA license applications.


The Reserve Bank of India has instructed payment aggregators Razorpay and Cashfree to stop bringing in new merchants until the final receipt of their payment aggregator license. 

For the uninitiated, Razorpay and Cashfree are some of the largest players in the Indian payment aggregator space. Payment aggregators offer payment gateway services to vendors, accept payment from customers on the vendor's behalf and remit them to the vendor on the date of settlement in exchange for payment gateway charges. 

With the growing influence and need for payment aggregators, the RBI announced in July 2022 that these non-bank aggregators need to be licensed under the Payment and Settlement Systems Act, 2007, to operate. 

Razorpay had received its in-principle approval in July itself while Cashfree received it sometime later. Paytm's application for the same was rejected recently and they were told to reapply. 

However, with this order, these Payment Aggregators have now paused the process of bringing in new merchants. Razorpay will be submitting a System Audit Report to the RBI after which, upon satisfaction, Razorpay will be permitted to bring in new merchants. 

"As part of this process, the RBI has requested us to temporarily withhold onboarding new online merchants till such details are submitted. As a responsible corporation that operates under the ambit of RBI, Razorpay has abided by the regulatory requirement. We would like to emphasize that this directive of the RBI has no impact on Razorpay's existing business operations and current merchants," a Razporpay spokesperson said.

Global payment aggregator Stripe also received the license in July but has been asked to open a Nostro account in India. 

Article by Aman Agarwal. 

 

imgg

Search Anything...!