Approval From RBI To Onboard Merchants
Following the acquisition of payment aggregator licenses from the Reserve Bank of India (RBI), major players are now directing their efforts toward expanding their merchant base by offering an array of products and services.
Harshil Mathur, the CEO and co-founder of RazorPay, stated, "We're planning to introduce special offers for new merchants joining our platform." The company is focusing on Whatsapp payments for businesses and omnichannel payment acceptance.
Recently, the RBI gave its final approval to several entities, allowing them to onboard new merchants after a year-long wait. In December 2022, the RBI had instructed platforms with in-principle approvals for payment aggregator licenses to halt new merchant onboarding until additional reports and audit documents were submitted.
Aside from RazorPay, entities like Cashfree Payments and EnKash also received approval from the central bank, enabling them to onboard new merchants.
Yadvendra Tyagi, co-founder of EnKash, mentioned, "We're actively strategizing and reshaping our team to seize opportunities in this emerging business segment. We have ongoing collaborations with 12 banking partners for their corporate customers." Tyagi highlighted that the license empowers their company to offer a comprehensive suite of modules, including a collection module.
As per RBI's March 2020 guidelines, payment aggregators must have a board-approved policy for merchant acquisition. These aggregators are described as entities facilitating e-commerce sites and merchants to accept payment instruments without requiring them to create their own payment interface.
Additionally, the guidelines differentiate payment gateways as entities providing technology infrastructure for processing online transactions. Payment gateways are mandated to obtain an aggregator license to acquire merchants and offer digital payment solutions.
Before the restrictions, RazorPay and Cashfree Payments dominated new merchant onboarding. Cashfree Payments' co-founder, Reeju Datta, mentioned their efforts to clear the queue and assist merchants in going live swiftly, emphasizing that 8,000 merchants are fully KYC compliant.
Cashfree's existing merchant base stands at 300,000 with around 30,000 new leads monthly. The company processed $40 billion in payments during 2022-23 and aims to double that in the current financial year.
Experts emphasize that payment companies need to focus on superior user experience, robust governance, security, fraud prevention, risk management, and effective customer grievance handling to gain market share.
Rohan Lakhaiyar, partner at Grant Thornton Bharat, highlighted the importance of metrics tracking the number of merchants served, along with payment volume and value processed, in the digital payments tech stack.
