Cred receives in-principle approval from the RBI for payment aggregation business

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Fintech firm Cred has received in-principle approval from the Reserve Bank of India (RBI) for the payment aggregation (PA) business, said people familiar with the development.
Once it gets the final approval, the Peak XV-backed Bengaluru-based startup, which primarily runs a credit card bill payment platform for creditworthy customers, can double down on the merchant payments business too, joining the ranks of Razorpay and Cashfree.

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It usually takes about six months after the in-principle nod for a company to get the final approval from the RBI. CCAvenue, Innoviti Payments and MSwipe are also among the payment companies which received their final PA licence recently.

Cred did not comment on the development.

The company runs Cred Pay in partnership with other payment companies, offering a check out option to its users on popular ecommerce platforms. Once the final PA licence comes through, it will be able to settle and transfer funds by itself.

As an online payment aggregator Cred can offer merchant payments to any online seller. The RBI allows PAs to manage funds through an escrow account and offer value-added services on top of payments.

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On Tuesday, the regulator issued draft guidelines for payment aggregators suggesting strict know-your-customer requirements on the part of merchants.Cred is also developing an offline payments business and will start deploying QR code based ‘scan and pay’ payments at retail outlets. It will build on the UPI payments facility that Cred is pushing.

It might need to apply separately for the payment aggregator-point of sale (PA-P) licence. Once the final guidelines on PA-P are released, there will be more clarity on the application process.

The company is promoting Cred UPI during the current season of Indian Premier League. As per industry data for March, Cred was the fourth largest UPI payments application after PhonePe, Google Pay and Paytm. While it has a miniscule market share compared to the other three, it has managed to build its consumer payments business in a short time.

“Cred wants to be present at every point of a transaction for the Cred user – payments, shopping and credit – and this payments bet is crucial for that,” said a person in the know, who did not wish to be identified.

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