CRED has received in-principle approval for a payment aggregation license in a boost to the Indian fintech startup that could help it better serve its customers and launch new products and experiment with ideas faster.
The $6.4 billion Bengaluru-based startup received in-principle approval from the Reserve Bank of India (RBI) for a payment aggregation license this week, according to two sources familiar with the matter.
CRED did not immediately respond to a request for comment.
The RBI has granted in-principle approval for payment aggregator licenses to various companies, including Reliance Payment and Pine Labs, over the past year. Typically, the central bank takes nine months to a year to issue full approval after in-principle approval.
Payment aggregators are essential to facilitate online transactions by acting as intermediaries between merchants and customers. RBI approval enables fintech companies to expand their offerings and compete more effectively in the market.
Without a license, fintech startups must rely on third-party payment processors to handle transactions, and these players may not prioritize such orders. Obtaining a license allows fintech companies to process payments directly, reduce costs, gain more control over the payment flow and directly onboard merchants. In addition, licensed payment aggregators can settle funds directly with merchants.
A license may also allow CRED to be available to more merchants and “generally be everywhere their customers shop,” said an industry executive.
The in-principle approval of a license for CRED follows the Indian central bank’s crackdown on several fintech business practices in recent quarters and it is generally becoming cautious about granting licenses of any kind to businesses. In a surprise move, the Reserve Bank of India ordered Paytm Payments Bank earlier this year to cease most of its operations.
CRED – which includes Tiger Global, Coatue, Peak XV, Sofina, Ribbit Capital and Dragoneer among its backers – serves a large portion of India’s affluent clients. It originally started six years ago with the ability to help members pay their credit card bills on time, but has since expanded its offerings to include loans and many other products. In February, it announced it had reached an agreement to buy mutual fund and equity investment platform Kuvera.
