Pine Labs' Plural, Razorpay get RBI approval for payment aggregator licence

Fintech companies Razorpay and Pine Labs' Plural are among the first to receive an in-principle nod from the Reserve Bank of India (RBI) for a payment aggregator (PA) licence, which will help them offer merchant payment services.

The central bank introduced the Payment Aggregator framework in 2020, in which it mandated that all payment aggregators would need to be authorised by it to be able to provide merchants with payment services. The framework also stipulates that all companies that receive the licence will come under the direct purview of RBI.

The grant of the licence is crucial for payment companies to be able to offer their platforms to merchants, who can then integrate it on their websites and offer customers a myriad of payment options like cards, UPI, wallets, EMI, net banking, etc.

Without the PA licence, this falls apart.

In the ecommerce sector, which has been gaining steam in India since 2020, PAs have vastly helped make online payments easier by offering various modes of payments.

Ecommerce companies, as well as D2C and B2C companies, prefer integrating or using PAs to collect payments because they're cheaper, faster, and offer more user-friendly features such as instant refunds, versus bank payment aggregators that typically come with high set-up costs and are harder to integrate.

PAs also offer analytics and data insights--a feature absent on bank payment aggregator platforms.

For payment companies like Paytm, Pine Labs, Razorpay, etc., the grant of the RBI licence would mean the ability to do business and offer licenced payment services to other businesses.

Neither Pine Labs nor Razorpay immediately responded to YourStory's request for a comment.

Moneycontrol and The Economic Times reported the news first, citing sources aware of the development.

The RBI has asked the companies that have received the in-principal approval to conduct an audit within the next six months to get the final sign-off, Moneycontrol reported.

A host of other players, including PhonePe, BharatPe, CRED, Paytm, etc., have also applied for the licence.

The official list from the RBI is expected to come soon.

Separately, Nikhil Kumar, Co-founder of Setu, which was last month acquired by Pine Labs, broke the news on Twitter that the startup's unit, Agya Technologies, had received an in-principle licence for 'Account Aggregator'.

(The copy has been updated to say Pine Labs' Plural, not Setu, received the in-principle licence for payment aggregator, and the context on payment aggregator licence has been added.)