Several payment gateways like Razorpay, Cashfree, among others, have been asked to temporarily cease onboarding new merchants by the Reserve Bank of India (RBI) until it can comply with their requirements, according to The Economic Times. The decision taken by the RBI is related to the payment-aggregator (PA) licences which were issued to these companies in 2022, the report added. The companies now have to submit a system audit report to the central bank following which the RBI will consider lifting the freeze, as per ET. Razorpay told the business daily that neither its existing operations nor merchants will be affected by this freeze. Why it matters: It may be a matter of concern because it spells regulatory uncertainty for the fintech sector at large. The inability to rope in new customers may not affect their existing business but it is bound to cause disruptions and may force prospective clients to opt for other services. Why the curbs: The central bank wants entities to comply with the payment aggregator guidelines from 2020 as soon as possible in order to onboard new merchants as per the new norms, The Economic Times reported, adding that final licences will be issued only after the compliance. The freeze is even more interesting as the RBI governor Shaktikanta Das held a meeting with fintech companies and associations on December 14, 2022, where he highlighted the proactive and supportive role of the RBI in providing a conducive policy environment for responsible innovation”. Restraints on Paytm: The…
