RBI greenlights Razorpay, Cashfree as payment aggregators

Razorpay and Cashfree have recently obtained the final approval from the Reserve Bank of India (RBI) to function as Payment Aggregators (PAs), allowing them to resume the onboarding of new merchants onto their payment platforms. This development follows a temporary halt initiated by these payment processing companies, including Razorpay, after an RBI advisory on December 16, 2022, according to media reports.

Cashfree shared the news on LinkedIn, stating, "We have received the final authorisation to operate as a payment aggregator from the Reserve Bank of India (RBI). We are thrilled to announce that we are now onboarding businesses on Cashfree Payment Gateway."

The RBI's decision comes a year after it advised companies like Razorpay, Cashfree, and Stripe to refrain from onboarding new merchants until they obtain the final approval for the PA licence. Notably, PayTm, PayU, and JusPay are still awaiting the RBI's final nod.

How do payment aggregators boost online sales?

Payment Aggregators play a crucial role in facilitating e-commerce transactions by allowing merchants to accept various payment instruments without developing their own systems. These entities collect payments from customers, consolidate them, and transfer the funds to the respective merchants.

In July 2022, Pine Labs, Razorpay, and Stripe were amongst the first to receive in-principle approval for the PA licence. However, the final approval process was prolonged, with the RBI stipulating that an audit must be conducted within the next six months to secure the ultimate nod.

Upon receiving the final PA licence, Razorpay expressed its focus on serving customers with payment solutions, emphasising its position as one of the first Payment Gateways to receive final authorisation. Cashfree's spokesperson also expressed excitement about onboarding new merchants and driving growth in the payments space.

This regulatory development aligns with the RBI's efforts to bring entities facilitating cross-border payment transactions under its direct regulation, ensuring a robust and compliant ecosystem within the fintech sector.