RBI has rejected MobiKwik’s application for a payment aggregator license due to its ties to the cryptocurrency industry

MobiKwik’s payment aggregator license has been rejected by the Reserve Bank of India (RBI) due to its ties to cryptocurrency platforms. According to insiders, the Gurugram-based business, which has received approval for a Rs 1,900 million IPO, would be unable to recruit new merchants. Existing businesses that use Zaakpay as a payment gateway will have 180 days to cancel their subscription.

The RBI denied MobiKwik’s bid to operate Zaakpay

According to sources, MobiKwik’s support for cryptocurrency exchanges via Zaakpay was one of the key reasons for the Reserve Bank of India’s denial of its payment aggregator license.

MobiKwik will be unable to add new clients that use Zaakpay as a payment gateway due to the RBI’s red signal.

The corporation immediately ceased supplying services to all crypto enterprises at the beginning of April and refused to explain why. Shaktikanta Das, the governor of the Reserve Bank of India, had stated that India’s position on Bitcoin is clear. According to the RBI, private cryptocurrencies pose a substantial threat to the country’s macroeconomic and financial stability.

MobiKwik was founded in 2009 by Bipin Preet Singh and Upasana Taku, a husband-and-wife duo. MobiKwik launched Zaakpay as its payment gateway in 2012, allowing websites and apps to take payments from customers via various methods, including debit and credit cards, mobile wallets, UPI, and net banking.

Several Indian crypto exchanges have prohibited the usage of UPI technology on their platforms due to the RBI’s denial. The National Payments Corporation of India (NPCI), which manages retail payment and settlement systems in India, has made an official statement claiming that it is unaware of any cryptocurrency exchanges that use UPI.

Two days following the NPCI explanation, the RBI issued an order to freeze trading on hundreds of Indian bitcoin exchanges. On Bitcoin exchanges, MobiKwik was one of the most popular e-wallet providers. Due to the unexpected suspension of UPI services, these exchanges rely on peer-to-peer transfers and agreements with a few large institutions to execute crypto trading.

Payment channels in India are being scrutinized

According to analysts, the Reserve Bank of India has looked at online payment providers like Cashfree and MobiKwik. These fintech companies may now risk rejecting their payment aggregator licensing applications by the RBI.

Cashfree was accused of hindering the RBI’s investigations, with representatives allegedly being questioned about merchant relationships for payout services, know-your-customer (KYC) standards, net worth restrictions, and onboarding betting apps as clients by regulatory bodies.

According to RBI guidelines, payment aggregators must have a net value of Rs 15 crore on the date of their applications or by March 31, 2021, and Rs 25 crore by the end of FY23.

Last year, the Indian Directorate of Enforcement (ED) looked into various Indian payment gateways for allegedly allowing customers to deposit money to Chinese gambling apps. One of the firms under investigation was Cashfree.

The bank has been in negotiations with payment gateways and other fintech businesses seeking a payment aggregator license for several months. The payment aggregator framework was originally introduced in March 2020, and it limits firms to those the RBI has approved to supply and acquire payment services for trades.

At least 185 fintech companies have filed for payment aggregator licenses, including Cred, Razorpay, and PhonePe. The RBI has yet awarded no permits. According to reports, the body has told firms that their applications have been denied.

Merchants have three months after an application is refused to stop using a gateway’s service. The RBI wants to extend this time to six months, according to sources. Meanwhile, the finance ministry and the central bank are working on a digital version of the rupee called the central bank digital currency (CBDC).

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