Fintech firm Cashfree Payments is waiving gateway fees on the first ₹20 lakh in transaction value to double its merchant base by FY27. The move aims to attract small businesses in a highly competitive market where switching providers has become increasingly easy.
Detailed Coverage
Cashfree Payments is aggressively targeting new small and medium business (SMB) clients by eliminating payment gateway fees for the first ₹20 lakh in gross merchandise value (GMV) processed. This offer is available to new merchants until the end of the 2026-27 financial year, with the company aiming to double its current base of one million merchants to two million by that time.
Strategic Expansion and Revenue Model
The Bengaluru-based fintech company views this initiative as a customer acquisition cost. According to co-founder Reeju Datta, the business model relies on the expectation that merchants will continue using the platform once they exceed the ₹20 lakh transaction threshold, at which point standard processing fees will apply. The company is positioning this offer to capture market share from competitors, particularly among businesses looking for reasons to switch their current payment service providers.
Competitive Dynamics in Digital Payments
The Indian digital payments landscape is intensely crowded, with over 50 payment processing entities vying for market share. Major competitors in this space include established players such as Razorpay, PayU, and PhonePe. A significant challenge for all providers in this sector is the low barrier to entry and exit for merchants. Integration technologies have evolved to the point where setting up a new payment gateway can now be completed in minutes rather than months, making merchant loyalty a constant battleground for these firms.
Investment and Future Plans
Beyond merchant acquisition, Cashfree Payments is focusing on broader financial goals. In May 2026, the company announced its intention to raise over $100 million in a fresh funding round scheduled for FY27. These capital resources are earmarked for investments in artificial intelligence and cross-border payment infrastructure. The current fee waiver program also emphasizes the integration of diverse payment modes, such as credit cards on Unified Payments Interface (UPI) and various card networks, to provide a comprehensive solution for long-tail merchants.
Investors may monitor whether this aggressive customer acquisition strategy impacts the company's profit margins in the near term. The effectiveness of this program will depend on the company's ability to retain merchants after they surpass the fee-free threshold and how competitors respond to this pricing pressure in the coming quarters.