The Reserve Bank of India has asked Razorpay and Cashfree to temporarily stop the onboarding of new customers for their payment processing business, according to a source.
On the banking regulator's order, Razorpay said it is a temporary move and has no impact on Razorpay's existing business operations and current merchants.
"RBI has issued an order a few days back asking Razorpay and Cashfree to stop customer onboarding," a source told PTI.
Cashfree denied giving any immediate response on the issue.
When contacted, Razorpay said it received in-principle approval from the RBI in July for a payment aggregator and payment gateway license and the company is now required to share additional details with the RBI to aid in the final license process.
"As part of this process, the RBI has requested us to temporarily withhold onboarding new online merchants till such details are submitted. As a responsible corporation that operates under the ambit of RBI, Razorpay has abided by the regulatory requirement. We would like to emphasize that this directive of the RBI has no impact on Razorpay’s existing business operations and current merchants," a Razorpay spokesperson said.
RBI issues payment aggregator licences to entities involved in online payment processing while a payment gateway permit is meant for entities providing technology for payment processing.
The spokesperson said that Razorpay continues to onboard new businesses on other Razorpay services - RazorpayX, Corporate Card, and Offline payments via Ezetap.
"Razorpay's operations are fully compliant with all regulatory guidelines and the company continues to be in touch with RBI for the next steps," the spokesperson added.