RBI approves fintech company Cashfree Payments to launch cross-border payment product

Cashfree Payments

Payment and API banking solutions company, Cashfree Payments has recently announced that it has received the RBI nod for its cross-border payment product.

The product would allow Indian fintech companies to provide the option for Indian investors to buy shares, exchange-traded fund (ETF) units, and other assets listed on foreign exchanges using UPI/net banking.

The company claimed that it successfully piloted the solution during RBI’s Second Cohort under the Regulatory Sandbox on cross-border payments.

Investors will now be able to effectively purchase foreign stocks with the help of an app that is integrated with Cashfree Payments. Investors will be required to login into the app, finish their KYC formalities, and start transferring funds in Indian rupees (INR).

The transferred amount will then be converted into foreign currency by the company and remit it to the foreign broker.

Investors can start with as low as INR 1,000 to invest. Additionally, the company offers savings on foreign exchange (FX) fees and quicker settlements for access to funds.

Sharing his views, the Co-founder of Cashfree Payments, Reeju Datta, said, “We are delighted to have successfully completed the test phase of RBI’s Second Cohort under the regulatory sandbox on Cross Border Payments. This achievement validates our efforts to constantly build innovative and effective solutions in the payments ecosystem. Our cross-border payments platform intends to make investing in foreign stocks a lot simpler and more convenient, allowing retail investors to make payments via local payment methods. The product was evaluated on varying parameters, and clearing the evaluation further reiterates the resilience and agility that is a trademark of the Cashfree Payments systems. We look forward to working with the Indian fintech ecosystem and offering access to international investments to Indian investors.”

Earlier, investing in foreign stocks has been one of the most difficult procedures for Indians who wish to invest in international companies. The procedure required completing A2 forms, paying expensive fixed fees, and in many circumstances, visiting a bank branch.

Cashfree claims to bring a solution to this issue with the help of its technology; payments made through UPI, Net Banking, and LRS compliance are integrated, simple, and completely digital.

According to the RBI, regulated entities may contemplate adopting the product if all relevant regulatory conditions are met. The cross-border investments fall under the ambit of RBI’s Liberalized Remittance Scheme (LRS).

The Cashfree Payments proposal was assessed on mutually agreed upon test scenarios and expected outcomes on several parameters like innovation in cross-border payments, ability to transform the cross-border payments landscape, and leveraging technology to come up with a cost-effective, secure, and transparent system.

In September 2021, eight companies, including Cashfree Payments, were chosen for the RBI’s Second Cohort’s test phase. Later, the announcement of the exit of the second cohort revealed that the product had been found to be viable within the boundary parameters established during testing under the Regulatory Sandbox.

Indian investors mostly prefer US stocks, particularly those of huge technology and pharmaceutical businesses. Thus, Cashfree Payments is collaborating with several Indian fintech platforms to introduce cross-border investing as a feature.

Currently, Cashfree Payments claims to dominate bulk disbursals in India with a market share of over 50% among payment processors with its product Payouts.

Also Read | Cashfree Payments partners with EasyTransfer

Recently, SBI, India’s largest lender, invested in Cashfree Payments, highlighting the company’s contribution to the creation of a strong payments ecosystem. Cashfree Payments works closely with all leading banks to build the core payments and banking infrastructure that drives the latter’s products.

The company is also associated with platforms such as Shopify, Wix, Paypal, Amazon Pay, Paytm, and Google Pay. Other than India, eight other countries, including the USA, Canada, and UAE, use Cashfree Payments products.

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