Razorpay & Cashfree back in business; RBI's green flag to onboards new merchants

New Delhi: After a long wait of almost one year, India's Central Bank the Reserve Bank of India opened the gate for payment aggregators Razorpay and Cashfree by lifting the ban on both.

Now they both can onboard new merchants on its platform for online payments. This is very essential moment for both platforms to back to the grind and focus on compliance.

What is the Razorpay and Cashfree case? Read here

1. Payment Aggregator License:

Back in August 2022, both Razorpay and Cashfree were placed under a temporary embargo by RBI, preventing them from onboarding new merchants as payment aggregators due to concerns regarding their KYC-Compliance processes and alleged facilitation of illegal activities like Chinese loan apps.

2. Enforcement Directorate Raids:

In September 2022,  the Enforcement Directorate (ED) raided the offices of Razorpay, Cashfree, including Paytm as a part of an investigation into illegal Chinese loan apps. Further ED suspected these payment gateways of facilitating suspicious transactions and money laundering for the loan apps, which were accused of predatory lending practices.

While investigating more both Razorpay and Cashfree have denied any wrongdoing and have cooperated with the authorities.

3. Technical Integration:

Razorpay and Cashfree offer payment gateway services alongside other fintech solutions. Their documentation describes how merchants can integrate both platforms for specific functionalities, like routing smaller payments through Cashfree for optimization. This is primarily a technical collaboration between the two companies to enhance their service offerings for merchants.

And finally, after nearly a year in 2023, both companies received approval from the RBI to operate as payment aggregators again. This was a significant development for them, allowing them to resume merchant onboarding and accelerate growth.