California-headquartered payments giant Stripe has encountered a temporary roadblock in its India ambitions. The company has now announced a shift to an “invite-only” model for new account sign-ups in India, citing the country’s evolving regulatory landscape (particularly the Know Your Customer (KYC) norms) for payment aggregators.
“We’ve made the tough decision to temporarily offer our services by invite only in India. This means that businesses from India will not be able to sign up for a new Stripe account through our website, and will instead need to request an invite. We will only be able to support a select number of businesses, with a focus on international expansion, for the time being,” the US-based fintech major said in a statement on its website.
As mentioned earlier, at the heart of Stripe’s decision lies the challenge of being in compliance with India’s stringent KYC norms, which are mandated by the Reserve Bank of India (RBI). The new “invite-only” policy prioritizes two key segments: existing Stripe account holders in India and new businesses with a strong focus on international expansion. Existing users can breathe a sigh of relief, as their accounts and access to Stripe’s services remain unaffected. For new Indian businesses seeking to join the platform, they face a roadblock since new sign-ups are paused, which means that they will need to explore alternative payment aggregators (PA) to facilitate online transactions. Fortunately, India boasts a robust fintech landscape with numerous payment aggregators offering similar services. These PAs have likely already adapted their onboarding processes to comply with the stricter KYC requirements, allowing businesses to integrate their services relatively quickly.
Nitesh Singhal, founder of fintech consultancy Aryaa Advisors, pointed out the economic logic behind Stripe’s move. “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,” he said.
Since December 2023, Stripe had already started slowing down the onboarding of new users. Nonetheless, earlier this year, the company received approval from the RBI to operate as a payment aggregator (PA) in the country, allowing it to facilitate international payments in over 135 foreign currencies. “We remain strongly committed to India and are working to build out the infrastructure to be able to support more users by the second half of 2025,” Stripe said.
This development comes at a time when Stripe has aspirations to become a significant player in the Payment Aggregator – Cross Border (PA-CB) sector, especially with new cross-border trade regulations coming into effect. Despite the temporary restriction, however, the fintech giant has plans to reopen its services to a broader audience by the second half of 2025, following necessary infrastructure upgrades. This will allow it to focus on enhancing its systems to comply with India’s regulatory framework. Stripe has also introduced additional verification steps for existing users, including the verification of payout bank accounts and proof of business for sole proprietorship firms. These measures are intended to ensure compliance with RBI’s guidelines.
