Fintech giant Razorpay has been asked by the Reserve Bank of India (RBI) to pause onboarding of new online payment merchants as the central bank requires the Bengaluru-based company to make certain changes and provide more information before it is granted the final payment aggregator (PA) licence, people aware of the matter told FE.
According to a PTI report, Cashfree, another fintech firm, has also been asked to to temporarily stop onboarding new customers. No immediate comments were received from Cashfree, it said.
“As part of the migration to a full PA licence, Razorpay will have to make some systematic upgrades and migrations to an escrow account from a nodal account, among a few other things,” one of the sources cited above said. Razorpay was granted the in-principle approval for a PA licence in July.
It is one among several fintech companies to receive in-principle approval from the RBI for a PA licence. Stripe, MSwipe, Innoviti and Pine Labs are among those who have received the licence. As part of of the payment aggregator framework formed by the RBI in March, only entities approved by the central bank can facilitate payments for merchants and other e-commerce sites.
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According to one of the sources, Razorpay will likely submit a report to the RBI early next week and once that is approved, the company can continue onboarding new merchants.
Confirming the development to FE, a Razorpay spokesperson said, “As part of the process for the final authorisation of our PA/PG licence for which we received the in-principle approval from RBI in July, we are now required to share additional details with RBI to aid in the final licence process. As part of this process, RBI has suggested us to temporarily withhold onboarding new online merchants till such details are submitted. As a responsible corporate that operates under the ambit of RBI, Razorpay has abided by the regulatory requirement.”
“We would like to emphasise that this has no impact on Razorpay’s existing business operations and current merchants. Also, we continue to onboard new businesses on other Razorpay services — RazorpayX, Corporate Card, and Offline payments via Ezetap. Razorpay’s operations are fully compliant with all regulatory guidelines and the company continues to be in touch with RBI for the next steps,” the statement said.
Razorpay’s annual total payment volume (TPV) north of $65 billion is one of the largest in the fintech space, thanks to its eight million-strong merchant base. Rivals like BillDesk and CCAvenue, which is owned by Infibeam, have an annual TPV of around $90 billion and roughly $18-20 billion, respectively.
The Tiger Global-backed company was last valued at $7.5 billion and has raised over $800 million from other investors like Sequoia and Mastercard.