PayU gets RBI's in-principle approval to operate as payment aggregator

Prosus-backed fintech PayU, on Tuesday, received an in-principle approval from the Reserve Bank of India (RBI) to operate as a payment aggregator.

The company said it can start onboarding new merchants on its platform with the in-principle approval.

“This licence is pivotal in our mission to establish a globally renowned digital payment infrastructure rooted in India. Aligned with the government’s Digital India initiative and the RBI’s forward-thinking regulations, we are dedicated to driving digitisation and financial inclusion, particularly for small merchants,” said Anirban Mukherjee, chief executive officer (CEO), PayU.

It usually takes six months to one year after the in-principle nod for a company to get the final approval from the regulator.

Once the company receives the final nod from the RBI, it will join the ranks of other companies such as Razorpay, Cashfree Payments, CCAvenue, Digio, Decentro, among others.

In January last year, the banking regulator had asked the fintech company to reapply for a payment aggregator licence. The company’s complex corporate structure was one reason why the RBI asked it to reapply for the licence.

Along similar lines, in August last year, the company sold part of its financial technology business to Israel’s Rapyd for $610 million. The deal allowed Rapyd, a fintech-as-a-service provider, to acquire PayU’s Global Payments Organisation (GPO). However, the deal excluded PayU’s India, Turkey, and Southeast Asia operations.

In an interaction with Business Standard in February this year, Mukherjee said the company had implemented ‘a substantial part’ of the structure simplification proposals that were recommended by the RBI.

Mukherjee said one of the company’s strategic shifts last year was to make it ‘India-centric’.

At present, PayU has a base of over 500,000 merchants in the country. It operates across three business sectors which include payments, credit, and PayTech generating over $60 billion in annualised volumes.

The company is looking to tap into the consumer credit space, eyeing a demographic that is young and increasingly affluent.

The company’s lending arm, PayU Finance, provides consumers with short-term loans that can be availed in the form of small-ticket credit, express loans, and others. The company is focusing on lending to the small and medium-sized business (SMB) space, targeting merchants.