Razorpay, a B2B banking and payments platform, said in a statement on Monday that the Reserve Bank of India (RBI) had granted the company approval in principle for a license to operate as a payment aggregator (AP).
The deadline for submission of permission applications by non-banking companies providing PA services was initially set for June 30, 2021, but was later extended to September 30, 2021 by the RBI.
More than 185 fintech companies and startups have submitted their license applications to operate a payment aggregator under the regulator’s rigorous screening process. The few companies that have been licensed to operate as payment aggregators in India would report directly to the RBI.
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What is this license?
A number of mediators, including payment gateways and payment aggregators, facilitate payments in the online world. These intermediaries act as a link between those seeking goods and services and the merchants who supply them. The function of these intermediaries is essential for a successful Internet experience.
The RBI had published a payment aggregator framework in March 2020 stating that payment gateways will need to be licensed in order to acquire merchants and offer them digital payment acceptance solutions. This was done to protect the welfare of consumers and businesses.
The regulations required all payment gateways (PGs), including Razorpay, CCAvenue, Stripe, BillDesk, and Cashfree, among others, to obtain a license in order to continue operating.
Many competitors, including PhonePe, BharatPe, Cred, Tata Group, Amazon, Reliance Industries and Zomato, have submitted license applications.
Without the license, e-commerce businesses and other participants would be forced to rely on an AP or form a partnership with a bank that could consolidate payments on their behalf, increasing expenses and increasing the volume of business of these licensed companies. .
Who have it all so far?
Along with US payments company Stripe, Pine Labs and Razorpay, fintech start-up 1Pay Mobileware has announced that it has received approval in principle from RBI for the license.
The list of players who have been approved in principle for the license has yet to be made public by RBI.
(Edited by : Anand Singha)