Zomato writes down investment in fintech arm; surrenders PA, wallet licence to RBI

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Foodtech major Zomato wrote down Rs 39 crore investment in its fintech subsidiary Zomato Payment Private Limited (ZPPL) during the March quarter.

Further, the filings showed that the fintech arm surrendered its recently-secured online payment aggregator (PA) and prepaid payment instrument (PPI) licenses to the Reserve Bank of India (RBI), citing that the firm does not see a business in payments space as commercially viable.

"The company has performed the impairment assessment under Ind AS 36 and recognised an impairment loss of Rs 39 crore in the profit and loss
account (as exceptional item) on its investment in ZPPL," the filings read.

Zomato said that the payment landscape in the country has evolved over the few years since the time they applied for these licenses, and it doesn't see the payments business as commercially viable at this point.

"We do not see ourselves having a significant competitive advantage against the incumbents in the payments space and hence we don’t foresee a business in payments space as commercially viable for us, at this stage. While we were conscious of these developments as they unfolded, the real impact was more apparent as we got closer to putting in place the structure to commence the operations," the company in an exchange filing on May 13.

The licences allowed Zomato to process online payments by itself and offer wallet, cash cards, etc. services to its customers, giving it more in-house control over digital payments alongside third-party apps. The idea was reducing costs associated with third-party payment services, both gateways and payments apps, and save on merchant charges.

Zomato said the other operations of ZPPL will continue and the development will have no material impact on the revenue or operations of the firm.

The online food and grocery delivery major had incorporated ZPPL in August 2021 with an authorised share capital of Rs 20 crore.

Last year, the company rolled out its own unified payments interface (UPI) offering, called Zomato UPI, in partnership with ICICI Bank.