California-headquartered payments giant Stripe has temporarily gone "invite-only" in India, citing the country's evolving regulatory landscape and its current inability to offer quick launches and easy onboarding for new users.
The move by Stripe falls in line with the stringent Know Your Customer (KYC) norms for domestic payment aggregator firms, which requires them to overhaul their existing KYC practices.
"The regulatory landscape in India continues to evolve, and our goal is to offer the same experience in India that we aspire to offer to all our users worldwide. For example, enabling all new users to launch quickly with easy onboarding is a fundamental Stripe feature that we cannot promise in India today," the company said.
Effective immediately, the new businesses in India will no longer be able to sign up for a Stripe account through the company's website and must request an invitation instead.
Adhering to RBI rules
The latest development indicates that Stripe is reducing its PA business to its larger customers with long-standing relationships to ensure that the businesses abide by RBI’s norms.
“Cross-border payments have higher margins than domestic payments. India domestic is a high risk-low reward business and KYC lacunas can take down companies. Stripe will do well to leverage their strengths in international acquiring and only power the Indian businesses focusing on the international market," said Nitesh Singhal, founder of fintech consultancy, Aryaa Advisors, which focusses on cross border payments. Singhal was previously the head of UPI for Axis Bank.
He further added, "This prioritisation shows their aspirations to be a big Payment Aggregator - Cross Border (PA-CB ) player as the new cross border trade regulations come into force."
According to Stripe, it plans to re-open its services to a broader audience by the second half of 2025, after completing necessary infrastructure upgrades, it said.
"We’ve made the tough decision to temporarily offer our services by invite only in India...We will only be able to support a select number of businesses, with a focus on international expansion, for the time being," the company said in a blog post.
“Stripe might be opting for a waiting period rather than dealing with the hassle of immediate on-boarding. Currently, they and most of the gateways seem to be accepting businesses with Pvt. Ltd. incorporation or equivalent that want to accept international payments. A lot of accounts created before the guidelines were onboarded without the current level of KYC requirements and hence those will get closed,” says a founder with payment firm.
Stringent verification
Stripe had started to “slowdown” on onboarding new users since December 1 last year, besides closely reviewing currently enrolled accounts.
As per sources, multiple accounts run by single user were abruptly shut by the company and were asked to create new ones.
In an email dated April 18, seen by Moneycontrol, Stripe said it is making some changes to how they onboard new users in India to comply with the RBI’s guidelines.
“We would like you to know that Stripe is making some changes to how we onboard new users in India in order to ensure our long term product offering and onboarding processes are in line with the specific needs of businesses in India,” the email reads.
The company has mandated verification of payout bank accounts used for settlement purposes along with proof of business for sole proprietorship firms not registered.
Further, additional KYC details like permanent account number (PAN), emails and business titles of the account openers, URL(s) containing terms and conditions of the service provided, including refund and return timelines, were also made compulsory.
The Indian arm of Stripe, which has been present in India since 2016, received final nod from RBI to operate as a payment aggregator (PA) in January. Stripe India accounts allow users to accept international payments in over 135 foreign currencies.
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