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RBI grants licenses to payment aggregators including Razorpay and Stripe

Payment aggregators were previously a blind spot, but will now be under the central bank RBI’s purview, with 1Pine approved and other major players lined up

What’s happening? Payments and banking platform for merchants, Razorpay announced on July 11 that it has received the Reserve Bank of India’s (RBI) in-principle approval for a Payment Aggregator (PA) license, news agencies reported.  The RBI has also approved the same for three other major payment gateways: 1Pay, Stripe and Pine Labs. Other major players are also expected to get the banking regulator’s approval for the license.  What are payment aggregators? Payment aggregators facilitate merchants to connect with acquirers. These entities enable e-commerce sites and merchants to accept various payment instruments from customers for completion of their payment obligations, without the need for merchants to create a separate payment integration system of their own.  In the process, they receive payments from customers, pool and transfer them to the merchants after a while. As per RBI guidelines, payment aggregators need to maintain a net worth of Rs 15 crore as of March 2021, and a net worth of Rs 25 crore by on or before March 2023. Thereafter, they have to maintain a net worth of Rs 25 crore at all times.  Why does this matter? Getting the Reserve Bank’s nod for the payment aggregator’s licences means that Razorpay and the other entities will now be directly under the purview of the central bank. Previously, this was something of a blind spot in the banking regulator’s policies. Now looking at the important functions, these companies play in the online payments space and their role in handling funds, the RBI decided to…

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