Zomato's Payment Arm Receives RBI Nod as Official Payment Aggregator

Zomato Payment Pvt Ltd (ZPPL), a wholly-owned subsidiary of Zomato Limited, has successfully secured approval from the Reserve Bank of India (RBI) to function as an online payment aggregator. The confirmation came through an official exchange filing on BSE, affirming ZPPL's status as an authorized payment aggregator and issuer of prepaid payment instruments, effective January 24, 2024.

RBI Authorization and Operational Scope

"We wish to inform that ZPPL has been granted a certificate of authorization dated January 24, 2024, from the Reserve Bank of India ("RBI") to operate as an 'Online Payment Aggregator' in India with effect from January 24, 2024, as per the guidelines issued by the RBI," the filing read.

Corporate Background and Purpose

Zomato, the renowned food delivery platform, had initially incorporated ZPPL in August 2021. The company initiated this subsidiary with an initial subscription of 10,000 equity shares of Rs 10 each, totaling Rs 1,00,000. This move was disclosed through an exchange filing, clarifying that ZPPL was established with the specific objective of seeking payment aggregator authorization.

Facilitating Seamless Transactions

Payment aggregators like ZPPL play a crucial role in enhancing the efficiency of e-commerce sites and merchants. These entities enable the acceptance of various payment instruments, including credit cards, UPI, and wallet payments, without necessitating the development of a separate payment integration system by the merchant.

Acting as intermediaries, payment aggregators streamline the payment process, making transactions more seamless for both customers and merchants.

Recent Ventures and Diversification

In the previous year, Zomato ventured into the financial services sector by launching a UPI service in collaboration with ICICI Bank. This service allows users to make not only merchant payments but also facilitates peer-to-peer transactions, expanding Zomato's financial offerings.

Zomato's Stock Market Performance

As of the latest update, Zomato's shares were trading at Rs 136 on the BSE index at 3:40 pm.

RBI Authorization and Operational Scope

"We wish to inform that ZPPL has been granted a certificate of authorization dated January 24, 2024, from the Reserve Bank of India ("RBI") to operate as an 'Online Payment Aggregator' in India with effect from January 24, 2024, as per the guidelines issued by the RBI," the filing read.

Zomato Payments Bites into the FinTech Arena

• Zomato's wholly-owned subsidiary, Zomato Payments Pvt Ltd (ZPPL), has secured a pivotal RBI certificate of authorization to operate as an online payment aggregator (PA) in India.

• This license, effective January 24, 2024, positions Zomato to significantly expand its footprint beyond online food delivery and delve into the dynamic Indian FinTech space.

Decoding the Significance of PA License

• Payment aggregators play a crucial role in simplifying online transactions. They act as intermediaries, enabling e-commerce websites and merchants to accept diverse payment methods (credit cards, UPI, wallets) without individual integrations.

• This authorization empowers Zomato Payments to directly facilitate seamless digital payments between customers and merchants beyond Zomato's platform itself.

Zomato's FinTech Aspirations Take Flight

• This move aligns with Zomato's strategic push towards diversified financial services. Earlier in 2023, the company partnered with ICICI Bank to launch a UPI service for both merchant and peer-to-peer payments.

• Securing the PA license paves the way for Zomato to potentially offer a wider range of financial products and services, potentially including:

  • Merchant loans and credit lines

  • Micro-investments and wealth management solutions

  • Insurance products tailored for e-commerce and gig workers

Implications for the Indian FinTech Ecosystem

• Zomato's entry into the PA space adds a strong contender to the already bustling Indian FinTech landscape.

• This development could further intensify competition among established players like Paytm, Razorpay, and PhonePe, potentially leading to more innovative and cost-effective payment solutions for consumers.

• It also highlights the growing convergence of e-commerce and FinTech, driving a more integrated and seamless user experience.