CRED has received in-principle approval for a payments aggregator license, giving the Indian fintech startup a lift that might help it higher serve its customers, launch latest products and experiment with ideas faster.
The $6.4 billion-valued Bengaluru-headquartered startup received in-principle approval from the Reserve Bank of India (RBI) for the payments aggregator license this week, in response to two sources accustomed to the matter.
CRED didn’t immediately reply to a request for comment.
The RBI gave in-principle approvals for payment aggregator licenses to several firms, including Reliance Payment and Pine Labs, last 12 months. Typically, after in-principle approval, the central bank needs nine months to a 12 months to grant full approval.
Payment aggregators are crucial to facilitating online transactions as they act as intermediaries between merchants and customers. The RBI’s approval will enable fintech firms to expand their offerings and compete more effectively available in the market.
Without a license, fintech startups could have to depend on third-party payment processors to process transactions, and these players may not prioritize such mandates. Purchasing a license allows fintech firms to process payments directly, reduce costs, gain greater control over payment flow and onboard merchants directly. Additionally, payment aggregators with licenses can transact funds directly with merchants.
A license can even allow CRED to be available to more retailers and “generally be wherever their customers shop,” an industry executive said.
The in-principle license approval for CRED comes as India’s central bank has cracked down on many fintech business practices in recent quarters and has generally turn into more cautious about issuing licenses of any kind to firms. In a surprise move, the Reserve Bank of India ordered Paytm Payments Bank to suspend most of its operations earlier this 12 months.
CRED – whose backers include Tiger Global, Coatue, Peak XV, Sofina, Ribbit Capital and Dragoneer – serves a big portion of India’s wealthy customers. The company originally launched six years ago to assist members pay their bank card bills on time, but has since expanded its offerings to incorporate loans and several other other products. In February, the corporate announced that it had reached an agreement to buy mutual fund and equity investment platform Kuvera.
