Juspay, Zoho, Decentro: New Payment Aggregators by RBI

The Reserve Bank of India (RBI) has granted final authorization to three more companies – Juspay, Zoho, and Decentro – to operate as payment aggregators in India. This approval allows these companies to provide payment services to online merchants by accepting payments from customers.

What is a payment aggregators?

A payment aggregator is a service provider that enables online businesses and e-commerce platforms to accept payments from customers using various modes such as cards, wallets, UPI, net banking, etc. A payment aggregator acts as an intermediary between the merchant and the customer’s bank or payment system. A payment aggregator collects the payments from customers on behalf of the merchants and transfers them to the merchants’ accounts after deducting a fee.

Why is a payment aggregator license important?

A payment aggregator license is important because it allows companies to offer payment services to online businesses without requiring them to obtain a separate license from the RBI or partner with a bank or a payment system operator. A payment aggregator license also ensures that the companies comply with the regulatory requirements and guidelines issued by the RBI for ensuring security, customer protection, data privacy, and dispute resolution.

Who are the new payment aggregators?

The three new companies that have received the final authorization from the RBI to operate as payment aggregators are:

• Juspay: Juspay is a Bengaluru-based fintech startup that operates as a full-stack payment gateway that supports cards, wallets, UPI, and other modes of payments. Juspay processes over 4 billion transactions annually for clients such as Amazon, Flipkart, Swiggy, Ola, etc. Juspay also offers products such as Juspay Safe, which enables secure and frictionless payments, and Juspay Express Checkout, which enables one-click payments.
• Zoho: Zoho is a Chennai-based software-as-a-service (SaaS) company that offers a suite of cloud-based applications for businesses such as Zoho CRM, Zoho Books, Zoho Invoice, Zoho Mail, etc. Zoho has over 60 million users across 180 countries. Zoho is the first enterprise SaaS player to get the payment aggregator license from the RBI, which will enable it to offer integrated payment solutions to its customers.
• Decentro: Decentro is a Hyderabad-based fintech startup that allows neo-banks, marketplaces, and fintechs to integrate banking solutions through its APIs. Decentro offers services such as account opening, KYC verification, lending, card issuance, bill payments, etc. Decentro aims to democratize access to banking services for businesses and consumers.

Who are the other payment aggregators?

The RBI has issued final authorization to eight companies so far to operate as payment aggregators in India. The other five companies are:

• Stripe: Stripe is a US-based global fintech company that provides online payment processing solutions for e-commerce platforms and online businesses. Stripe entered India in 2021 and received the final authorization from the RBI in January 2023.
• Zomato: Zomato is an Indian online food delivery platform that operates in over 500 cities across India and 23 countries globally. Zomato received the final authorization from the RBI in January 2023.
• Tata Pay: Tata Pay is a digital payments platform launched by Tata Digital, a subsidiary of Tata Sons. Tata Pay received the final authorization from the RBI in January 2023.
• Razorpay: Razorpay is an Indian fintech startup that offers payment gateway solutions for online businesses and e-commerce platforms. Razorpay received the final authorization from the RBI in December 2022.
• Cashfree: Cashfree is an Indian fintech startup that offers payment gateway solutions for online businesses and e-commerce platforms. Cashfree received the final authorization from the RBI in December 2022.

Who are still awaiting approval?

Some of the prominent players that are still awaiting final approval from the RBI to operate as payment aggregators are:

• Pine Labs: Pine Labs is an Indian fintech company that provides point-of-sale (POS) solutions for merchants and consumers. Pine Labs has received an in-principle approval from the RBI but is yet to get full authorization.
• Infibeam: Infibeam is an Indian e-commerce company that operates platforms such as Infibeam Avenues, CCAvenue, BillAvenue, etc. Infibeam has received an in-principle approval from the RBI but is yet to get full authorization.
• PhonePe: PhonePe is an Indian digital payments platform that offers UPI-based payments, wallets, recharges, bill payments, etc. PhonePe has received an in-principle approval from the RBI but is yet to get full authorization.
• Easebuzz: Easebuzz is an Indian fintech startup that offers payment gateway solutions for online businesses and e-commerce platforms. Easebuzz has received an in-principle approval from the RBI but is yet to get full authorization.
• Cred: Cred is an Indian fintech startup that offers a platform for credit card users to pay their bills and get rewards. Cred’s application is still under process by the RBI.
• PayU: PayU is a global fintech company that provides online payment solutions for e-commerce platforms and online businesses. PayU’s application is still under process by the RBI.

What are the eligibility criteria for a payment aggregator license?

The RBI has set stringent eligibility criteria for obtaining a payment aggregator license. Some of the key criteria are:

• The company should be registered in India under the Companies Act, 2013.
• The company should have a minimum net worth of Rs 15 crore at the time of application and Rs 25 crore within three years of commencement of operations.
• The company should have a board-approved policy for customer grievance redressal and dispute management.
• The company should have a board-approved policy for data security, data privacy, and data localization.
• The company should have a board-approved policy for fraud prevention and risk management.
• The company should comply with the RBI’s guidelines on cybersecurity, KYC, anti-money laundering, etc.

What are the challenges and opportunities for the new payment aggregators?

The new payment aggregators face several challenges and opportunities in the Indian market. Some of the challenges include:

• Competition from existing players: The new payment aggregators will have to compete with established players such as Razorpay, Cashfree, Paytm, PhonePe, Google Pay, etc., who have a large customer base and network effect.
• Regulatory compliance: The new payment aggregators will have to adhere to the stringent regulatory norms and guidelines issued by the RBI, such as maintaining a minimum net worth of Rs 15 crore, ensuring data security and privacy, conducting regular audits and reporting, etc.
• Customer acquisition and retention: The new payment aggregators will have to invest in customer acquisition and retention strategies such as offering competitive pricing, value-added services, seamless user experience, etc.

Some of the opportunities include:

• Growing digital payments market: The digital payments market in India is expected to grow at a CAGR of 27% from 2019 to 2025, reaching $1.4 trillion by 2025 . The Covid-19 pandemic has accelerated the adoption of digital payments among consumers and merchants alike.
• Innovation and differentiation: The new payment aggregators can leverage their core competencies and expertise to offer innovative and differentiated solutions to their customers. For example, Juspay can leverage its technology stack and data analytics capabilities to offer faster and safer payments; Zoho can leverage its SaaS platform and customer base to offer integrated business solutions; Decentro can leverage its API platform and banking partnerships to offer customized banking solutions.
• New segments and use cases: The new payment aggregators can tap into new segments and use cases that are underserved or untapped by the existing players. For example, Juspay can target small and medium enterprises (SMEs) that need affordable and reliable payment solutions; Zoho can target niche sectors such as education, healthcare, non-profits, etc. that need specialized software and payment solutions; Decentro can target neo-banks, fintechs, and marketplaces that need flexible and scalable banking solutions.

Conclusion

The RBI’s approval of three more payment aggregators – Juspay, Zoho, and Decentro – is a positive development for the Indian digital payments ecosystem. It reflects the regulator’s support for innovation and competition in the sector. It also creates more choices and opportunities for online businesses and e-commerce companies to accept payments from customers. The new payment aggregators will have to overcome the challenges and leverage the opportunities to succeed in the market.

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