RBI asks Razorpay, Cashfree to hold off onboarding new merchants
Pine Labs, Stripe, and others could face these routine restrictions too as part of their compliance process for the PA/PG licence, a source tells YourStory. Pine Labs and Stripe haven't received those notices, they said.
Payment companies and have received notices from the Reserve Bank of India (RBI) to withhold onboarding any new online merchants to their platforms, pending their audit for the payment aggregator/payment gateway licenses (PA/PG), sources told YourStory.
The embargo will be in effect only until the three companies submit an audit report to the RBI showing they have complied with its rules and regulations for the payment aggregator/payment gateway (PA/PG) licences.
, , and were among the first ones to get an in-principle nod to provide PA/PG services.
Razorpay confirmed that it has received the notice, saying "As part of the process for the final authorisation of our PA/PG license for which we received the in-principle approval from RBI in July, we are now required to share additional details with RBI to aid in the final license process. As part of this process, RBI has suggested we temporarily withhold onboarding new online merchants till such details are submitted."
"We would like to emphasise that this has no impact on Razorpay’s existing business operations and current merchants." The startup added that this does not affect RazorpayX, Corporate Card, and offline payments via Ezetap.
YourStory had earlier reported that Pine Labs and US-based fintech Stripe had also received similar notices, citing a source familiar with the approval process for the PA/PG license. Stripe and Pine Labs, however, have said they haven't received any such notices.
Another industry insider told YourStory that these processes are part of the RBI's audit process for any sort of licence, and that if the companies had not received these yet, "they still could as the process goes on. This isn't an aberration or out of the ordinary; these are routine processes, and you'll hear more companies (who are completing the audit process for the PA/PG license) in the coming weeks facing similar, temporary restrictions."
Razorpay is likely to submit its audit report to the regulator as early as next week, and the embargo could be lifted in a couple of weeks. Cashfree told a YourStory reporter it would not be commenting on the development.
The news on Razorpay being asked to hold off onboarding new merchants was first reported by Moneycontrol.
"The action is not a punitive one, otherwise the RBI would've mentioned it on the website," one of the sources cited above said.
These restrictions are not likely to have any material effect on the companies, and are part of the audit process. The suspension of merchant onboarding is only for audit purposes, and for the RBI to do its due diligence before granting the companies their PA/PG licenses.
(The copy was updated to add statements from Stripe, Pine Labs, and more background information.)
Edited by Affirunisa Kankudti