RBI approves Cashfree for a licence as a payment aggregator

• ByStartupStory     |    September 30, 2022

The Reserve Bank of India has been selective in awarding licences for payment aggregators and payment gateways, and the central bank has only given initial approval to companies like Razorpay, Pine Labs, and Stripe whose primary business is in payments. According to three individuals who talked to Entrackr, the State Bank of India-backed company Cashfree Payments is now the most recent participant to receive in-principle approval for a payment aggregator (PA) licence.

According to one of the insiders who asked to remain anonymous, “RBI has awarded PA licence to Cashfree early this month,” when referring to the preliminary permission. “Within the next month or two, the corporation will make a formal announcement.” Following a central bank audit in the upcoming months, the bank will make a final choice regarding whether to issue the company a licence.

The company is relieved by the decision because it had been wondering whether it would be granted after its application had been pending for a while. A licence for a payment aggregator enables businesses to process several payments and take part in payment settlement. Payment aggregation has been provided by PA/PG platforms, although the RBI requested that they submit applications for a license.

The insider informed us that “Cashfree also acquired a prepaid payment instrument licence from the RBI.” The company does not operate any consumer-focused payment companies, but it is now permitted to hold customer funds in prepaid wallets, just like Paytm and Mobikwik. Requests for comment from Cashfree and RBI went unanswered. 

The RBI turned down more than 100 PA applications because many of the companies involved traded cryptocurrencies, wagered on sporting events, and gambled without having a net worth of at least Rs 15 crore. Zaakpay, which is owned by MobiKwik, is reportedly being turned down because of its insufficient financial worth.

In the licencing procedure, the RBI reportedly only takes into account businesses that rely heavily on payments. Applications from the online food ordering platform Swiggy, Zomato, and GPay are probably going to be turned down.

Currently, only Pine Labs, Razorpay, Stripe, and 1Pay Mobile ware have received official approval for a PA/PG licence. The names of a few chosen entities should shortly be made public by the central banking organisation.

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