Cross-border payments licences spawn a new funding rush for fintechs

This shift could be decisive as small businesses look for faster, cheaper and more predictable solutions. Fintechs could mediate 15-20% of India’s estimated $1.6 trillion cross-border flows in five years, from low single digits today, founders and analysts say Mint He spoke with.

A handful of major payment gateways, including Cashless Payments, Razorpay and PayU have received or applied for PA-CB approvals; A parallel group of specialist startups backed by venture capitalists and even global companies like Stripe are emerging as new players.

The problem was

Before the RBI established a formal licensing regime, most small ticket cross-border flows were conducted through the OPGSP model dominated by PayPal and a few global banks. This was not a truly regulated framework; Any payment provider with a connection to an authorized dealer bank could route export or import receipts, but with low transaction limits ($10,000 for exports and $2,000 for imports), heavy paperwork, and inconsistent bank interpretations.

This led to delays and frequent documentation problems. As Indunath Chaudhary, co-founder of BriskPe, puts it: “They saw us as distribution arms of other banks, so exporters often had difficulty accepting payments smoothly even when everything was fine.”

Xflow co-founder Anand Balaji said the model also creates visibility gaps for banks. “When the RBI came to audit, there were a lot of questions that banks were finding difficult to answer,” he said.

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In July 2023, a major step towards reform was taken when the Delhi high court, in a case related to PayPal Payments, ruled that such platforms operate an effective payment system and must meet licensing and anti-money laundering norms.

As of October 2023, the RBI replaced the OPGSP structure with the PA-CB framework, bringing all intermediaries under direct supervision. Rules increased limits per transaction ₹25 lakhs required net worth ₹15 crore (ascending) ₹25 crore in three years) and mandatory registration with the Financial Intelligence Unit of India.

In 2025, these norms were transformed into unified payment aggregator guidelines covering online, offline and cross-border aggregators under a single rulebook.

seize the opportunity

Even as India builds its digital public infrastructure, cross-border remittances remain predominantly paper-based, said Vivek Ramji Iyer, financial services partner and national leader at Grant Thornton Bharat. He believes that with the PA-CB reforms, there is now a “huge opportunity” to digitize cross-border payments.

“Banks have not moved quickly enough to redesign end-to-end documentation and workflows for faster resolution of cross-border payments for exporters and importers, and the new framework is the RBI’s way of shaking up an ecosystem that has grown too comfortable with legacy processes and narrow trade and treasury,” Iyer added.

India’s cross-border payment opportunity is already huge. According to World Bank and WTO-based estimates compiled by Santander and WITS, in 2023 the country exported goods worth about $432-455 billion and services worth about $340-345 billion, while importing about $670 billion in goods and $248 billion in services; This brings the value of total cross-border trade flows to well over $1.6 trillion.

BriskPe’s Chaudhary sees room for regulated players to handle a meaningful portion of India’s future export flows. The government is targeting around $2 trillion in total exports of goods and services in the medium term, with MSMEs accounting for around 45-50% of exports by value. If MSMEs contribute about half of the $2 trillion, close to $1 trillion of MSME-led export flows will need better, cheaper cross-border rails, he said, adding that fintechs and PA-CB licensed intermediaries could realistically capture about a fifth of this MSME opportunity over time.

Funds following growth track

Such expectations attract investors’ attention to these intermediaries. BriskPe was founded by former HDFC Life executive Sanjay Tripathy, former Nium CTO Nilesh Pathak and banking-turned-operator Chaudhary have raised around $5 million in seed funding from PayU and other backers so far and are focusing on MSME exporters and small businesses.

Chaudhary said the company is in talks for a larger financing round and has received “more serious interest” from international and Asia-Pacific investors rather than traditional domestic venture funds. However, he refused to disclose the amount BriskPe wanted to raise.

Bengaluru-based Skydo is also in early talks to raise around $15-20 million from local and global venture capital funds, while Xflow is in talks with existing and new international investors on a possible $10-15 million round, people in the know said. Mint could not independently verify the details.

Xflow co-founder Balaji confirmed that the company is in talks with investors and has “enough money in the bank” for now, but he declined to comment on any specific round or valuation.

Many large payment companies have also taken action to secure their place in the PA-CB regime. Cashfree Payments is among the first organizations to receive a full cross-border payment aggregator licence, while Razorpay and PayU have received approvals to operate as payment aggregators across online, offline and cross-border flows.

Other players like PayGlocal, EximPe and global majors like PayPal and Wise have either received in-principle permission or final authorization to conduct PA-CB business in India; This has created a small but fast-growing club of regulated entities that can legally broker foreign exchange for Indian exporters.

Movin Jain, co-founder of Skydo, said investors now see cross-border payments as a “market with huge global potential”, helped by clearer regulation and higher barriers to entry under the PA-CB regime. “Growth tailwinds are equally strong. India’s exports are rapidly shifting towards digital services and this segment is booming. More than 60% of our volume comes from services exporters and freelancers, and this demand is only accelerating with AI-driven outsourcing and global remote working,” he said.

Call to increase import payments

Founders and analysts say early opportunities for PA-CB players are still shifting towards export revenues rather than import payments.

In simple terms, export payments are dollars or other foreign currencies that come to India when an Indian firm sells goods or services abroad; For example, a SaaS startup in Bengaluru invoices a US customer for $1,000 and receives the money in rupees after currency conversion through a PA-CB platform.

These flows comply with existing rules because the PA-CB framework is expressly designed to facilitate export revenues while imposing stricter conditions on imports. PA-CBs can now participate directly with Indian exporters and process their domestic remittances, but their import use cases are more limited.

BriskPe’s Chaudhary said the regulatory structure is pushing players in this direction. He said importing traders cannot tie up with any cross-border payment operator as the RBI encourages overseas sellers and marketplaces to open rupee accounts or work with Indian intermediaries.

This leaves a gap for Indian SMEs looking to pay overseas merchants more efficiently, he argued, and suggested imports could be opened up in phases, similar to how fintechs handle payments under the liberalized remittance scheme today.

Xflow’s Balaji said his company’s business is predominantly export-oriented, although it sees clear demand from Indian companies looking to pay foreign suppliers. He said current PA-CB import rules generally allow participation by the overseas trader or marketplace and not the Indian buyer, which limits how much of the import journey a player like Xflow can control.

Skydo is also seeing traction on the import side of digital product and service purchases and B2B merchant payments, Jain said. The first involves online payments to major global platforms, where failure rates are high due to differences in card security protocols; B2B imports to markets such as China and Vietnam experience slow payments, hidden fees and manual compatibility issues. “This is a rapidly growing opportunity and we are scaling our product build around these use cases,” he added.