The Reserve Bank of India (RBI) this month cleared Razorpay and Cashfree as payment aggregators though it has kept applications of Paytm and PayU in abeyance. The central bank had last year imposed a ban on major payment aggregators such as Paytm, Razorpay, Cashfree, and PayU, preventing them from onboarding new merchants and businesses.
So how have these businesses been coping after the ban?
While the ban slowed them down and impacted valuations, these companies have been exploring alternative revenue streams and diversification, including going global.
Paytm is redirecting efforts towards offline payments, catering to a market segment unaffected by the ban while Cashfree is actively developing value-added services atop its payment platform.
PayU India, another major player, reported revenue from its core payments business in the first half of the current fiscal year, primarily driven by its existing merchant base and subscription products like Wibmo. PayU has reapplied for the payment aggregator license and is engaging with existing merchants to boost total payment volume.
Razorpay has ventured into Malaysia and has been shifting its focus towards offering new products to existing merchants, aiming to increase revenue per customer. The company has introduced value-added offerings for the direct-to-customer segment and the broader payments ecosystem. Razorpay’s Chief Operating Officer noted a shift in revenue dynamics, with the share of revenue from new customers decreasing.
The challenges
The scrutiny from the Indian government has complicated matters for digital payment aggregators. Razorpay, Paytm, and Cashfree were entangled in the Chinese loan app case, prompting investigations by the Enforcement Directorate.
RBI’s ban on established payment companies has facilitated accelerated growth in merchant onboarding for emerging players such as Plural from Pine Labs, PhonePe, Innoviti Payments, Billdesk, and CCAvenue. These payment companies have been capitalising on the regulatory shift by aggressively onboarding merchants.
The government’s emphasis on digitising citizen payments has positioned players like Billdesk and CCAvenue as frontrunners in the evolving payments landscape. CCAvenue reported a significant surge in its total payment value.
While diversification into new business lines strengthens these online payment startups within their domains, the key challenge remains in digitising new merchants.
