Credit and Finance for MSMEs: Payments and B2B banking platform Razorpay today confirmed that it has received an in-principle approval by the RBI for a Payment Aggregator (PA) License.
The RBI had issued the guidelines in March 2020 to regulate the intermediaries (Payment Aggregators and Payment Gateways) that facilitate payments in the online space. It defines ‘payment aggregators’ as entities which act as intermediaries in the handling of funds. They enable merchants and e-commerce websites to accept payments from customers by integrating the payment service into the merchant’s payment system. The payment aggregator receives payments from customers and then transfers them to the merchants.
According to the notification, payment aggregators that had a net-worth of ₹15 crore by March 31, 2021 could apply for the license and they will have to maintain a net-worth of ₹25 crore by the end of current fiscal and the time thereafter.
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On announcement, Harshil Mathur, CEO and co-founder of Razorpay, said, “With the digital payments space coming under direct RBI regulation, we can expect to not only see an immense upsurge in online payment adoption and trust but also witness a magnified surge in digital payment innovations in the coming years. With this trust placed in us, we will continue building the financial backbone for businesses in India, one that is more cashless, more frictionless, more secure, and more connected.” Razorpay currently provides its payment solutions and financial services to over eight million businesses in the country.
Bhushan Parekh, Director, CRISIL SME Solutions says, “the rationale of the regulation is to weed out the companies at the bottom of the pyramid and protect the consumers’ interest. No good companies will have any challenge in meeting the checks and balances put out by the regulator.”
Around 185 companies have submitted the proposal to RBI to obtain the payment aggregator license, according to the company’s statement. Payment platforms such as 1Pay, PineLabs and Stripe have also recently received approval for the payment aggregator license from the RBI.