Jio Payment Solutions gets RBI greenlight for online payment aggregation

The authorisation, effective from October 28 permits JPSL to handle digital transactions in compliance with Section 7 of the Payment and Settlement Systems Act, 2007

Jio Payment Solutions Limited (JPSL), a subsidiary of Jio Financial Services (JFS), announced on Tuesday (October 29) that it has received approval from the Reserve Bank of India (RBI) to operate as an online payment aggregator.

 

The authorisation, effective from October 28, 2024, permits JPSL to handle digital transactions in compliance with Section 7 of the Payment and Settlement Systems Act, 2007.

 

Following the announcement, Jio Financial Services’ shares rose, trading at Rs 321.45 per share, up 1.45 per cent on Tuesday.

 

Jio financial service’s opportunity amid market shifts

 

With Paytm grappling with restrictions that prevent its financial services arm from onboarding new customers, Jio has an opening to capture a significant share of the digital financial services market.

 

Jio Payments Bank, also part of JFS, currently offers digital savings accounts with biometric access and a physical debit card. This service supports over 1.5 million active users who rely on it for daily transactions. Expanding on this base, JFS plans to broaden its banking offerings, building on the Jio Payments Bank’s savings account platform.

 

In FY24, with a suite of licences covering lending, insurance broking, and payment aggregation, Jio processed approximately 1.8 million UPI payments in April 2024 alone, underscoring its goal to become a major player in digital finance.

 

Rising digital payments against declining cash usage

 

Although cash represented about 60 per cent of consumer spending as of March 2024, an RBI study indicates this trend has been declining since the Covid-19 pandemic. Digital payments, particularly through UPI, have surged, with transactions rising from 14-19 per cent in 2021 to 40-48 per cent by 2024.

 

The study’s Cash Usage Indicator (CUI) highlighted reduced cash use, especially for high-value purchases, and UPI’s increasing role in merchant payments, accounting for 69 per cent of value and 87 per cent of transaction volume in FY 23-24.

 

Jio Financials’ Q2 FY25 results

 

Last week, Jio Financial Services reported a year-on-year increase of 3.12 per cent in consolidated net profit, totaling Rs 689.07 crore for the July-September quarter of FY25. While total income for the quarter rose by 14.14 per cent to Rs 694 crore, interest income increased to Rs 205 crore. However, total expenses doubled, reaching Rs 142 crore compared to Rs 71 crore in the same quarter of the previous year.