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Early in July, India’s banking regulator, the Reserve Bank of India (RBI), began began Economic Times Razorpay, Stripe, Pine Labs get RBI nod for payment aggregator licence Read more handing out payments aggregator licences to a bunch of companies. The licence would allow merchants to accept payments across different payment methods, such as cards and India’s real-time payments system UPI UPI Unified Payments Interface Mobile-based real time digital payments system . Among those that got the licence was the San Francisco-based payments startup Stripe, founded by brothers John and Patrick Collison.

Stripe was the first—and so far, only—foreign company to snag the licence. Homegrown payment unicorns Razorpay and PineLabs also got through, while wallet-turned-payments startup Mobikwik got its application rejected. Almost 200 companies—including tech giant Google, e-commerce company Amazon, and food delivery business Zomato—had applied. “Only about 20-30 firms are expected to get this licence,” said the chief executive officer (CEO) of a payments company.

Payments aggregator licences are prized possessions. Banks used to directly process online payments. But as more and more payment methods kept popping up, the need for a platform that could support merchants across all of them became a greater need. “Today, nearly 80% of online payments are via these aggregators,” said the CEO. Nearly US$25-US$30 billion worth of payments get processed monthly in India.

The licence is an especially big deal for Stripe. In the US, the 12-year-old company rose to be valued at a massive US$95 billion in 2021, supporting payments for fast-growing startups such as Shopify, WayFair, Instacart. Stripe’s stated aim is to ‘increase the GDP of the internet’. And in 2016 when it entered India, the internet contributed 5.6% to India’s GDP in 2015-16. This is according to a study by the Indian Council for Research on International Economic Relations and the Broadband India Forum. By 2020, this had grown to 16%.

However, while India’s internet economy has been growing all these years, supported by the rise of digital payments, Stripe has only been ceding ground in the country. For instance, crowdfunding platform Ketto was one of Stripe’s earliest and largest merchants in India. Its co-founder and chief technology officer (CTO) Zaheer Adenwala told The Ken that till about 2018 Stripe processed close to 60-70% of its volumes. That number is now down to about 10%.

Its market share in the country is minuscule, said at least three former Stripe employees The Ken spoke to. They requested anonymity as they did not want to come on record about their previous employer.

Stripe’s got UPI to thank for its dwindling market share. In a country where over 65% of payments are made through UPI, Stripe does not support UPI payments for its merchants.

AUTHOR

Arundhati Ramanathan

Arundhati is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She writes the newsletter Ka-Ching! every Monday. She lives in Bengaluru and has spent over 12 years reporting and writing on various subjects.

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