Cashfree is the latest large internet firm to cut jobs in a tough funding environment, joining the ranks of several Indian startups — especially edtech firms — and big tech firms such as Meta and Amazon, which have announced layoffs in the last few months.
Electric mobility startup Bounce; Tiger Global-backed business-to-business (B2B) marketplace Moglix and ecommerce rollup startup Upscalio have also sacked employees this month.
ETtech“Cashfree Payments has been periodically evaluating performances and processes as a standard business practice. The organisation has reevaluated the relevance of certain roles and functions leading to movement of talent within teams and a few employee exits. This process of organisational restructuring has impacted around 6-8% of employees,” a Cashfree spokesperson said in response to ETtech’s queries.
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The spokesperson, however, denied that around 150 employees were laid off.
People in the know said private lender ICICI Bank has paused its partnership with Cashfree’s bulk payout product offering. Payouts by Cashfree Payments is a payment disbursal product that allows businesses to make bulk payments. The payment gateway provider was offering this service to ICICI Bank’s business customers, after know-your-customer (KYC) approved accounts were created by it.
A Cashfree spokesperson denied that ICICI Bank had paused support for its payout product.
The layoffs at Cashfree come at a time when the fintech sector is grappling with the ongoing funding crunch and tightening of regulations by the country’s central bank.
Cashfree had been in talks to raise almost $100 million since the past year but the funding round remained stuck due to the economic downturn and several regulatory changes by the Reserve Bank of India.
Also read | VC funding for startups down 30% to $24 billion in 2022
The company was last valued at $200 million in June 2021, after it raised strategic funding from India’s largest lender, State Bank of India (SBI).
In December 2022, the RBI asked Cashfree to step up checks and stop self-onboarding services for its new merchants, ETtech reported on December 16, citing sources. As a result, the payments company had slowed its enterprise onboarding, we reported earlier. The central bank had also barred Cashfree’s competitor Razorpay from onboarding new merchants.
According to people aware of the matter, the central bank decision to pause merchant additions for these gateways was linked to their payment aggregator (PA) licenses. Entities that apply for a PA licence must submit to a system audit, which includes a cybersecurity audit. In addition, firms that have received RBI’s nod for a PA licence must shift from using nodal accounts to escrow accounts.
Illustration and graphics by Rahul Awasthi
