RBI Lifts Ban on Razorpay and Cashfree After a Year

The RBI's lifting of the ban on Razorpay and Cashfree heralds a transformative moment for Indian fintech, reflecting regulatory agility and unlocking a new era of innovation in digital payments,

The Reserve Bank of India (RBI) Lifts Ban on Razorpay and Cashfree After a Year development marks a crucial turning point for the fintech industry in India. Both companies have confirmed the removal of the ban, and this article will delve into the details surrounding this noteworthy decision.

Background – Last Year’s Restriction

Last year, the RBI imposed restrictions on various payment aggregators, including Razorpay, Cashfree, PayU, and Paytm. The central bank stipulated that these companies could not onboard new merchants until they obtained the necessary licenses. The ban was intended to be temporary, pending the acquisition of payment aggregator licenses.

Statements from Cashfree and Razorpay

Cashfree’s spokesperson has expressed the significance of obtaining the payment aggregator license from the RBI. According to the representative, this license is a pivotal moment for Cashfree Payments, allowing them to onboard new merchants onto their payment gateway. Razorpay, too, has voiced its excitement, committing to enrolling new customers and ensuring enhanced services.

Market Share Dynamics

The removal of the ban comes as a relief for Razorpay, Cashfree, and PayU India, who collectively held approximately 70-80% of the market share in onboarding new merchant accounts. This reinstatement opens doors for these companies to continue their dominance in the rapidly evolving fintech landscape.

Payment Aggregator License

What is a Payment Aggregator?

Payment aggregators play a crucial role as third-party service providers facilitating an easy payment receipt option for merchants. Customers can conveniently make payments through these platforms, while merchants can efficiently receive payments. Understanding the pivotal role of payment aggregators provides insights into the importance of RBI’s decision to lift the ban.

Cashfree vs Razorpay: Comparison in Table


Feature Cashfree Razorpay Comments
Pricing Flexible pricing based on transaction volume, customizable for high-volume businesses Flat 2% fee for domestic cards, 3% for international; additional charges for payouts, recurring payments, etc. Cashfree potentially cheaper for high-volume businesses
Payment methods Credit/debit cards, net banking, UPI, wallets, EMI (coming soon) Credit/debit cards, net banking, UPI, wallets, EMI Both cover major payment methods; Cashfree’s EMI availability is a potential advantage
Payouts Strong features for vendor and salary payouts, bulk refunds Offers payouts, but Cashfree may have more focused functionality Cashfree potentially better for businesses with frequent payouts
Integrations Easy integration with major platforms like Shopify, PayPal, Amazon Pay, Google Pay Good integrations with various platforms, including WooCommerce and Magneto Both offer diverse integrations
Customer support Multilingual enterprise-level support 24/7 support with multiple channels Both offer good support, but Cashfree’s multilingual feature might be useful for wider audiences
Transparency Clear pricing structure The pricing structure can be complex with additional charges Cashfree potentially easier-to-understand costs
Focus Focuses on the Indian market with tailored features Larger and global reach with a wider range of features Cashfree offers specialized solutions for Indian businesses

Both Cashfree and Razorpay are excellent payment gateways with strengths and weaknesses. The best choice for you will depend on your specific needs and priorities. Consider factors like pricing, payment methods, integrations, support, and your target market when making your decision.

Which payment geteway approved by RBI?

Payment processing majorĀ Razorpay and Cashfree have received the final authorization from the Reserve Bank of India (RBI) to operate as Payment Aggregators (PA). “We have received the final authorization to operate as a payment aggregator by the Reserve Bank of India (RBI).

Frequently Asked Questions (FAQs)

Q1: What is a payment gateway?
A1: A payment gateway is a technology that facilitates online transactions by acting as a bridge between a merchant’s website and the financial institutions involved in processing payments. It ensures secure and seamless transactions for both buyers and sellers.

Q2: Which payment gateways were affected by the RBI ban last year?
A2: The Reserve Bank of India imposed restrictions on payment aggregators such as Razorpay, Cashfree, PayU, and Paytm, preventing them from onboarding new merchants until they obtain the necessary licenses.

Q3: Has the RBI lifted the ban on all payment gateways affected last year?
A3: As of the latest information available, the RBI has lifted the ban on Razorpay and Cashfree. However, the status of other payment gateways, such as PayU and Paytm, may require verification from the latest sources.

Q4: How does a payment aggregator differ from a payment gateway?
A4: A payment aggregator is a third-party service provider that enables merchants to accept payments through various channels. In contrast, a payment gateway is a specific technology that authorizes and facilitates the movement of funds between a buyer and a seller during an online transaction.

Q5: What are the benefits of obtaining a payment aggregator license from the RBI?
A5: Obtaining a payment aggregator license from the RBI allows companies to operate legally in the Indian financial ecosystem, onboard new merchants, and contribute to the growth of digital payments in the country.

The RBI’s decision to lift the ban on Razorpay and Cashfree after a year holds immense significance for the Indian fintech sector. This move not only allows these companies to resume onboarding new merchants but also underscores the regulatory environment’s adaptability to the evolving needs of the digital payments landscape.

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