MobiKwik’s Zaakpay Gets RBI’s In-Principle Nod To Operate As Payment Aggregator

SUMMARY

The move will enable Zaakpay to offer payment aggregation services, onboard new merchants and enable easy processing of digital payments

MobiKwik’s original application for PA licence was as the company fell short of minimum net worth threshold of INR 15 Cr set by the central bank

The approval comes close on the heels of the fintech startup recording two consecutive profitable quarters in the current fiscal year even as there appears no clarity on the shelved IPO plans

MobiKwik’s payment gateway Zaakpay has received in-principle authorisation from the Reserve Bank of India (RBI) to operate as an online payment aggregator (PA).

This will allow Zaakpay to offer payment aggregation services and onboard new merchants.

Zaakpay enables merchants to accept and disburse digital payments, and has a product portfolio that encompasses checkout, payment links, and QR code payments solutions. It claims to offer more than 100 payment modes such as cards, net banking, UPI, wallets, among others.

“… The opportunity to support more businesses inspires us to continuously enhance the capabilities of our platform. This development reinforces our commitment to further develop MobiKwik into a comprehensive digital banking services platform,” said MobiKwik cofounder and chief operating officer (COO) Upasana Taku.

She also added that the approval will enable the platform to offer user-friendly payment gateway services to its clients and scale the number of merchants associated with the startup.

The RBI’s payment aggregator framework requires all payment gateway operators to acquire a licence to acquire merchants and deploy digital payments solutions. The framework sets aside minimum requirements related to net worth, compliance with KYC guidelines, as well as data storage mandates.

The MobiKwik Turnaround

The RBI nod comes more than a year after Taku confirmed that the startup had re-applied for payment aggregator licence in October last year.

MobiKwik first filed the application for the licence during the second wave of pandemic (March to June 2021), but it was rejected as the company fell short of minimum net worth threshold of INR 15 Cr for the first year of application. Zaakpay’s net worth then stood at INR 14.3 Cr, rendering it ineligible for the licence.

Eventually, the company infused capital in Zaakpay, making it eligible for the licence.

Founded in 2009 by Bipin Preet Singh and Taku, MobiKwik offers a suite of financial products for both consumers and merchants ranging from payments and digital credit to investments. It entered the unicorn club in October 2021 after a secondary sale of its employee stock options pushed the valuation beyond the $1 Bn mark.

The approval comes at a time when MobiKwik has been witnessing a spell of good news. The Delhi NCR-based company’s FY23 net loss declined 35% year-on-year (YoY) to INR 83.8 Cr. Afterwards, the company also said that it turned net profitable in the first quarter (Q1) of the current financial year (FY24) with a profit after tax (PAT) of INR 3 Cr.

The fintech platform notched up its second consecutive profitable quarter in Q2 FY24 with a PAT of INR 5 Cr. Meanwhile, MobiKwik’s revenue jumped 17% YoY to INR 208 Cr in the quarter ended September 2023.

However, there is no clarity on its IPO plans, which were shelved amid adverse market conditions and raging funding winter last year.

MobiKwik competes with the likes of Paytm, Simpl, and Infibeam Avenues.

The turnaround comes largely on the back of growing internet and smartphone penetration in the country, which has given a major impetus to the digital payments ecosystem. As per a report, the Indian payment gateways market is projected to grow to $2.68 Bn by 2027.