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

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

The product would allow Indian fintech companies to offer Indian investors the ability to purchase stocks, shares of exchange-traded funds (ETFs), and other assets listed on foreign stock exchanges using UPI/net banking.

The company claimed to have successfully piloted the solution during RBI’s second cohort as part of the cross-border payments regulatory sandbox.

Investors will now be able to efficiently purchase foreign stocks using an application integrated into Cashless payments. Investors will need to log into the app, complete their KYC formalities, and begin transferring funds in Indian Rupees (INR).

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

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

Sharing his view, Cashfree Payments Co-Founder Reeju Datta said, “We are delighted to have successfully completed the testing phase of the second cohort of RBI under the Cross-Border Payments Regulatory Sandbox. . This achievement validates our efforts to constantly build innovative and efficient solutions in the payments ecosystem. Our cross-border payments platform aims to make investing in foreign stocks much simpler and more convenient, allowing retail investors to make payments via local payment methods. The product has been evaluated on various parameters, and the evaluation approval further reiterates the resilience and agility that are a hallmark of the Cashless payments systems. We look forward to working with the Indian fintech ecosystem and providing access to international investments for Indian investors.

Previously, investing in foreign stocks was one of the most difficult procedures for Indians who wanted to invest in international companies. The procedure involved filling out A2 forms, paying onerous fixed fees and, in many circumstances, going to a bank branch.

Cashfree claims to provide a solution to this problem using its technology; payments made through UPI Compliance, Net Banking and LRS are integrated, simple and completely digital.

According to the RBI, regulated entities can consider adopting the product if all relevant regulatory conditions are met. Cross-border investments fall under RBI’s Liberalized Remittance Scheme (LRS).

The cashless payments proposal was evaluated based on mutually agreed test scenarios and expected results on several metrics such as innovation in cross-border payments, ability to transform the cross-border payments landscape and leveraging technology to deliver a cost-effective, secure, and transparent system.

In September 2021, eight companies, including Cashfree Payments, were chosen for the testing phase of the second RBI cohort. Later, the announcement of the release of the second cohort revealed that the product was found to be viable within the parameters established during the tests within the framework of the Regulatory Sandbox.

Indian investors mainly prefer US stocks, especially those of big tech and pharmaceutical companies. 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 disbursements in India with over 50% market share among payment processors with its Payouts product.

Read also | Cashfree Payments partners with EasyTransfer

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

The company is also associated with platforms such as Shopify, Wix, Paypal, Amazon Pay, Paytm and Google Pay. Apart from India, eight other countries, including the United States, Canada and the United Arab Emirates, use Cashfree Payments products.

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