In a highly innovative development, the Reserve Bank of India (RBI) has granted final authorization to RazorPay and Cashfree, enabling them to resume their operations as online payment aggregators. This remarkable move comes after a prolonged embargo that had limited both fintech companies from bringing onboard new merchants.
Reserve Bank of India (RBI) mandate for prompt reporting:
The RBI has requested RazorPay and Cashfree to promptly report any unusual incidents, such as cyber-attacks, critical system outages, internal fraud, and settlement delays, within 24 hours. This directive serves to further strengthen the central bank's dedication to upholding a strong and secure payment ecosystem.
(RazorPay Founders- Harshil Mathur, Shashank Kumar)
RazorPay and Cashfree have reacted:
A representative from RazorPay expressed the company's contentment, stating, "RazorPay has now been granted the final authorization from the Reserve Bank of India (RBI) to operate as a Payment Aggregator (PA) under the Payment Settlements Act, 2007. With this new PA license in our possession, we are pleased to be able to onboard new customers once again." Cashfree also echoed this sentiment, highlighting their dedication to adhering to regulations.
End of Restriction Period:
On December 13, 2022, the RBI implemented certain limitations on RazorPay's ability to onboard new merchants. However, with the recent removal of these restrictions, RazorPay is now in a position to resume onboarding new customers, signifying the conclusion of a difficult phase for the fintech company
Cashfree Payments emphasized the importance of obtaining the Payment Aggregator (PA) license, describing it as a crucial milestone. "We are currently welcoming new merchants onto our payment gateway," conveyed a spokesperson for Cashfree Payments, emphasizing the company's preparedness to embark on a new chapter of expansion.
On the other hand, PayU is eagerly awaiting a response from the RBI regarding its application for authorization. The outcome of these developments will play a vital role in shaping PayU's future operations in the payment aggregator space.
(CashFree Payments Founders: Akash Sinha & Reeju Datta)
Previous actions of the Enforcement Directorate:
On September 2022, the Enforcement Directorate (ED) conducted raids on the offices of RazorPay, Paytm, Cashfree, and PayU throughout the country. This action was associated with an FIR filed in Bengaluru regarding Chinese fraudulent loan applications. As a result, the RBI imposed certain limitations on these companies, such as preventing them from onboarding new merchants, and mandated them to reapply for a renewed payment aggregator status.
Conclusion:
RazorPay and Cashfree are entering a new and promising phase. The approval given by the RBI to RazorPay and Cashfree to operate as payment aggregators is a significant milestone for these fintech players. This action not only underscores the regulatory focus on compliance but also emphasizes the significance of a properly regulated payment environment. With RazorPay and Cashfree now able to onboard new merchants, the industry anticipates a rejuvenated period of growth and stability.
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