After a wait of nearly 15 months, the Reserve Bank of India (RBI) has given its in-principle nod to Prosus-backed fintech firm PayU to operate as a Payment Aggregator (PA) and restart onboarding new merchants.
In January 2023, the banking regulator had returned the fintech firm's application to operate as a PA due to its complex corporate structure and directed it to reapply for the same.
Following this move, PayU had to pause onboarding new merchants for its online payment aggregation business.
Similar ban was imposed on Paytm, Razorpay and Cashfree, of which the latter two received their approval in December last year while the former continues to await.
"This validation by RBI fills us with joy as it paves the way for us to welcome new businesses onto our platform. This is also a testament to our relentless focus on compliance and corporate governance," said Anirban Mukherjee, CEO, PayU.
He further added, “This license is pivotal in our mission to establish a globally renowned digital payment infrastructure rooted in India. Aligned with government's Digital India initiative and the RBI's forward-thinking regulations, we are dedicated to driving digitization and financial inclusion, particularly for small merchants.”
The IPO-bound fintech firm has been closely working with the regulator over the past year on its reapplication for the licence.
In FY23, PayU India reported a revenue of $400 million, a growth of 31 percent from the previous fiscal.
While the results for FY24 are awaited, its revenue from core payments business rose 15 percent to $211 million in the first half of the year (H1 FY24). This largely came from the existing merchants and payment processing stack Wibmo and its omnichannel business, with onboarding to new merchants remain paused.
Recently, Kunal Shah-backed fintech firm Cred also received the in-principle approval to be a PA, according to a source close to the development.
Being a PA helps companies to manage and move customers' money to merchants. This is not a final approval or license, which will be granted in around six to twelve months, but those who get in-principal approval can continue business unless told not to by RBI.
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