Razorpay, Pine Labs get RBI nod for payment aggregator licence

Financial services company Razorpay says it has received an "in-principle approval" from the ̉Reserve Bank of India (RBI) for a payment aggregator (PA) licence. Apart from Razorpay, Amrish Rau-led last-mile retail transaction technology firm Pine Labs and U.S.-based payments firm Stripe have also received the RBI PA licence.

Razorpay CEO Harshil Mathur says the RBI's in-principal approval only strengthens its commitment further. "We want to create new products and build experiences that will change the lives of millions of businesses and consumers,” says Mathur.

As per Mathur, with the digital payments space coming under direct RBI regulation, there will not only be an immense upsurge in online payment adoption but also a surge in digital payment innovations in the coming years.

Razorpay is one of the fastest-growing fintechs in India, which claims to provide payment solutions to over 8 million businesses. The RBI licence will help it make digital payments easily accessible for businesses.

Razorpay recently elevated Razorpay’s co-founder Shashank Kumar to the role of co-founder and managing director. Kumar, who worked as Razorpay CTO, was replaced by Murali Brahmadesam. Having a total workforce of about 2,300 members, Razorpay is backed by marquee investors such as Lone Pine Capital, Alkeon Capital, GIC, Tiger Global, Sequoia Capital India, Salesforce Ventures, Y Combinator and MasterCard. The company has so far raised a total of $741.5 million. Razorpay acquired a majority stake in Malaysian fintech firm Curlec in February 2022 to gain a foothold in South East Asia. The deal valued Curlec at about $19-20 million.

On June 9, B Amrish Rau, CEO, Pine Labs, said that Pine Labs got account aggregator and payment gateway licences last week. While Pine Labs received the payments aggregator licence, its subsidiary Setu got an account aggregator licence. "This week we were fortunate to get 2 major licences - Account Aggregator & Payment Agg/Gateway. There are many companies which have patents/licences, however the winners are ones who innovate & deliver value to customer. Our acceleration starts now," he adds.

Pine Labs acquired Bengaluru-based API (application programming interface) fintech startup Setu in June this year. The fintech firm, incorporated in Singapore, is backed by investors like Sequoia India, Actis Capital, Temasek, PayPal and Mastercard.

To ensure the safety of merchants and consumers, the RBI had issued a payment aggregator framework in March 2020, stating that payment gateways will be mandated to have a licence to acquire merchants and provide them with digital payments acceptance solutions.

Under RBI’s strict evaluation process, over 185 fintech enterprises and startups submitted proposals for a payment aggregator licence. Those who have received the licences of payment aggregators will come under the direct purview of the RBI.

As per the RBI, promoters of PAs will satisfy the fit and proper criteria prescribed by the RBI. The apex bank also checks the ‘fit and proper’ status of the applicant entity and management by obtaining inputs from other regulators, government departments, etc.