Stripe puts India comeback on indefinite hold
The payments firm, which received in-principle approval for its payment aggregator license in 2022 and final authorization to facilitate domestic transactions in January 2024, moved to an invite-only model later the same year, requiring Indian merchants to join a waiting list, after the Reserve Bank of India (RBI) recommended stricter know-your-customer (KYC) norms.
In a post on its website in May 2024, the company said it would support a select number of Indian businesses focused solely on international expansion and aims to onboard more users by the second half of 2025.
According to the three people mentioned above, by July of the same year, the multinational company worth more than $100 billion also surrendered the cross-border payment aggregator license it had received only three months earlier.
However, the San Francisco and Dublin-based firm’s plans to offer both business-to-business (B2B) and business-to-business (B2C) payments in India and compete with firms like Razorpay, Cashfree and PayU are currently on hold.
“The company was considering expansion beyond cross-border payments available to Indian merchants and has incorporated UPI (Unified Payments Interface) as an option in 2024,” said a payments executive on condition of anonymity. “But payment aggregators’ stricter rules on merchant onboarding have thwarted Stripe’s plans to launch a full-fledged payments platform here.”
Meanwhile, Stripe reiterated its support to Indian users. Mint‘s queries. “We are committed to supporting our users, including those looking to expand globally or reach customers in India.”
India’s cross-border payments market has expanded rapidly due to services exports, software as a service (SaaS) and global freelancing. This has attracted fintechs and payment aggregators that help small and medium-sized businesses invoice, collect and reconcile overseas flows.
Key players include Skydo, XFlow, BriskPe and Razorpay, as well as banks and global payment service providers such as PayPal.
India set a new remittances record in 2024-25, earning $135.46 billion in revenue, up 14% year-on-year, according to the latest RBI data. These inflows now account for more than a tenth of gross current account revenues, according to a recent industry report by global payments provider Worldline Global.
RBI switch in action
The company’s unique selling proposition was the instant onboarding of merchants and the ability for businesses to start accepting payments almost instantly across websites and apps.
But this model is no longer valid in India as the banking regulator now requires payment aggregators to perform full KYC for every seller – even if the seller has already completed the process with a bank.
In April 2024, the central bank issued draft instructions for payment aggregators and gateways, proposing changes in merchant due diligence norms, payment practices and maintenance of escrow accounts. It also proposed stricter KYC requirements that would trigger industry-wide re-verification of merchant details (including bank accounts and business credentials) to ensure payments flow only to the beneficial, linked entity.
The regulator has finalized a new framework by September 2025. Key directives include mandatory RBI authorization for non-bank payment aggregators by December 31, 2025, new capital requirements and enhanced merchant due diligence including KYC.
This emphasis on KYC of merchants and document verification to eliminate fictitious operators increases compliance costs for aggregators, a fintech founder said on condition of anonymity.
“RBI has made it clear that all existing and new merchants onboarded by payment aggregators must undergo KYC again,” the person said. “This increases compliance costs as each re-KYC has a cost per merchant that translates directly into operating expenses.”
Additionally, India’s data localization requirements and Digital Personal Data Protection (DPDP) framework further expands the scope of compliance for global players, the person added.
Shashwat Sharma, senior partner and financial services leader at global management consultancy Kearney, said the RBI has tightened the norms following a series of abuses in the payments ecosystem – fraudulent transactions, laundering risks and flows diverted to gambling and offshore lending practices.
He added that the regulator wants greater accountability from payment aggregators regarding continuous verification of merchant identity, business legitimacy and fund flows.
Stripe’s workaround
Due to the lack of a wide-scale rollout domestically, Stripe supports a limited number of exporters through partner lines that conduct full KYC through licensed payment aggregators and banks at merchants, while Stripe integrates as the routing and technical layer.
Sometimes described as a “merchant of record” or sub-merchant model within the licensed entity, this approach allows select Indian businesses to compliantly accept international card payments without acting as Stripe’s primary onboarding provider.
“What Stripe is probably doing right now is partnering with a licensed aggregator or a bank that onboards the merchant, does the KYC, and treats Stripe as a routing or integration layer,” the fintech founder said in a previously quoted statement. “This is not a loophole and is an acceptable structure where the licensed entity is the merchant of record and Stripe’s merchants operate as sub-merchants under this umbrella.”
But Kearny’s Sharma added that stricter KYC is not a paperwork exercise but a response to real risks. “When registered trader structures were misused, money found its way to gambling, offshore lending practices and dubious operators. The message from the RBI was clear… with full KYC and constant monitoring from day one, aggregators are responsible for who is involved and where the money goes.”
Stripe’s 2024 revenue, whose valuation was reported to have increased to $106.7 billion in September, increased by 34% to $5.1 billion and its pre-tax profit was $102 million. Forbes report.
