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Regulatory Ban Forces Payment Aggregators to Seek Alternate Revenue Streams
December 04, 2023
In a significant development, the regulatory ban on payment aggregators like Paytm, Razorpay, Cashfree, and PayU, now nearly a year old, has compelled these venture capital-backed firms to explore alternative revenue sources. Originally anticipated to last only six months, the ongoing restriction imposed by the Reserve Bank of India in December last year has left these companies in a state of anxiety.
The prolonged embargo has prompted these firms to redirect their strategies. Faced with slower growth and potential stress on valuations, companies such as Razorpay and Cashfree are focusing on international markets, offline payments, and remittances to offset the lost opportunities. Razorpay has expanded its operations to Malaysia, while Paytm concentrates on offline payments. Cashfree is diversifying by introducing a range of value-added services on top of its payment offerings.
Interestingly, the regulatory restrictions have inadvertently created opportunities for other players in the online payments sector. Plural from Pine Labs, PhonePe, Innoviti Payments, Billdesk, and CCAvenue are now aggressively onboarding merchants as they capitalize on the limited scope for their counterparts.
The affected companies remain tight-lipped about the impact on their operations. Razorpay declined to comment on queries from ET, while a spokesperson for Cashfree emphasized their commitment to ensuring merchants comply with onboarding and monitoring policies. As the ban continues, the industry is witnessing a dynamic shift, with payment aggregators adapting and exploring new avenues to sustain growth.
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