Cred Secures RBI In-Principle Approval for Payment Aggregator Role

22 Apr 2024 , 07:00 AM

Fintech firm Cred has obtained the Reserve Bank of India’s in-principle approval to operate as a payment aggregator (PA), as per a source familiar with the matter.

Being a PA enables companies to facilitate and transfer customers’ funds to merchants. However, this approval is not the final authorization or license, which is anticipated to be granted within six to twelve months. Nevertheless, entities with in-principle approval can continue operations unless instructed otherwise by the RBI.

Based in Bengaluru, Cred is the leading third-party application for credit card bill payments in India. It also offers various other products and services, including a small e-commerce platform, vehicle management solutions, and curated travel packages.

Led by Kunal Shah, Cred boasts a user base of over 15 million active customers and holds the fourth-largest market share (2.3%) in terms of transaction volume on the Unified Payments Interface (UPI), India’s largest digital payments platform.

Recently, Cred ventured into the wealth management sector with the acquisition of Kuvera, which served approximately three lakh affluent customers. Kuvera’s offerings include mutual funds, fixed deposits (FD), systematic investment plans (SIPs), international equities, pension funds, and digital gold.

Cred reported a substantial revenue growth of 256% in FY23, reaching ₹1,400 Crore, compared to ₹393 Crore in FY22. However, its losses widened marginally by 5% to ₹1,347 Crore in FY23 from ₹1,280 Crore in FY22. This was attributed to Cred’s successful reduction of customer acquisition costs by approximately 80% over the past four years.

Several payment gateway companies, including Razorpay, CC Avenue, Cashfree, Zoho, Tata Pay, and EnKash, have received the RBI’s final approval to operate as payment aggregators since late last year.

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