The Reserve Bank of India (RBI) has issued payment aggregator (PA) and payment gateway (PG) licenses to over 55 companies, including major players like PhonePe, BharatPe, Cashfree, and Razorpay, in the past two years, according to inc42.com. Despite this surge in licensing, Cashfree Payments CEO Akash Sinha emphasizes that holding a license is just the baseline and does not guarantee market dominance.
The RBI’s crackdown on non-compliant merchant onboarding in 2022 and 2023 triggered a rush for PA licenses, leading to a crowded market with numerous fintech and non-fintech firms entering the space. However, Sinha points out that the PA ecosystem remains concentrated, with only three to four companies controlling more than 80% of the market share. He explains that success depends more on product innovation and technology capabilities than merely possessing a regulatory license.
This concentration highlights the challenges new entrants face in competing for enterprise accounts, which generate the majority of transaction volumes. The licensing process, while necessary, involves compliance burdens and does not address the critical factors of product quality and technological edge. This dynamic shapes the competitive landscape of India’s payments sector, where a few dominant players continue to lead despite the proliferation of licensed entities.
Looking ahead, companies like Cashfree are focusing on enhancing their product offerings and technology to capture larger enterprise segments. The ongoing evolution of the payments industry will likely see further consolidation around firms that can combine regulatory compliance with superior tech and service innovation, as the market matures beyond the initial licensing phase.