Indian fintech players rush to get licence for offering international payment services

Domestic payment aggregators including Razorpay and Cashfree along with newer fintech firms like PayGlocal and Skydo are rushing to get a licence for offering international payment services, reported The Economic Times.

The deadline for applying for the payment aggregator-cross border (PA-CB) licence with the Reserve Bank of India is April 30.

“We have applied to RBI for the cross-border licence. We are focused on the software and services export segment majorly, but we have some goods exporters among our clientele too,” Movin Jain, cofounder of Skydo told The Economic Times. Skydo manages all formalities of international payments, with settlement within one day of the transaction.

Similarly PayGlocal is planning to apply for the PA-CB licence soon.

Cross-border payment

The Economic Times quoted Industry experts and said that the margins are at 2.5-4% per card transaction internationally compared to the 1% in India. The report further mentioned that apart from the intense competition, the move will help justify such local startups’ sky-high valuations. The average ticket size for B2B cross-border payments is estimated around $5,000.

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Since the volume of international consumer payments too is growing steadily, there is a huge opportunity in big-ticket cross-border merchant tickets.

“Razorpay is building a solution for cross-border business payments,” a senior industry executive told The Economic Times. “They (Razorpay) eventually want to expand from cross-border consumer payments to large ticket vendor payments for account-based fund transfers,” the executive added.

Similarly Cashfree has also applied for a PA-CB licence. Cofounder Akash Sinha said the focus will be on business to consumer (B2C) transactions initially.

“We already have a domestic payments business, we can bundle international payments as an offering for our existing merchants,” he told The Economic Times

Fintech transaction

The report quoted industry estimates and said that fintechs currently process approximately $10 billion of transactions, part of over $250 billion of exports by India’s small and medium businesses.

PA-CB guidelines

The RBI introduced the PA-CB guidelines to formalise the emerging international payments business and bring such fintech operators directly under its ambit in october 2023. Earlier, fintech firms were given an online payment gateway service provider licence. This identified them as a technology service provider to banks.