PayU gets payment aggregator licence from RBI

Fintech player PayU has received in-principle approval from the Reserve Bank of India (RBI) to operate as a payment aggregator, thus allowing it to onboard new merchants. The current RBI decision comes following the reapplication by PayU after the central bank's observation in January 2024.

With this approval, Prosus-led fintech joins a series of players, which were recently granted payment aggregator licence, including Razorpay, Cashfree, Open, Juspay, among others.

Now, the company can move existing users from RBL Bank, its partner bank, to its wallet. Its customers can also make payments via PayU's POS terminals. PayU boasts around 5 lakh merchants in India, which generate around $60 billion in annualised volumes.

PayU is also part of South Africa’s investment major Naspers, a global internet and entertainment group. In its HY2024 results, Naspers said PayU showed strong performance overall, with core payments service provider (PSP) business “profitable” and sustained growth in Indian businesses.

PayU’s Indian credit business grew its loan book by 66% with revenue up 31%, said Naspers, adding that consolidated trading loss narrowed to US$22m, with a 15 percentage point improvement in trading profit margin.

PayU India, the company’s India payments and fintech arm, recorded “meaningful growth” in the core payment service provider (PSP) business, driven by India payments, Turkey (Iyzico) and India credit, the company adds.

In H1 24, PayU had agreed to sell its GPO (Global Payment Organisation) business, excluding Turkey and Red Dot Payments, to Rapyd, a fintech-as-a-service provider, for $610m. After the sale, expected to close in the first half of calendar 2024, the core PSP business will constitute PayU India, Iyzico in Turkey and Red Dot Payments in Southeast Asia.

India is now the global leader in real-time payments, with 89.5 billion transactions in 2022, accounting for 46% of all global real-time payments transactions.

According to Netherlands-based consumer internet group Prosus’ latest report, India’s digital transformation is at the heart of its growth story over the past decade.

Prosus says its investments into digital India have totalled over USD 7bn. "These investments have been in some of India's most well-known companies, including PayU, Swiggy, Urban Company, Meesho and Pharmeasy, while our Ventures arm has also invested over USD 900m in early-stage start-ups in India."

Prosus says the Digital India initiative and DPI adoption have triggered "transformative developments" in areas like payments, where UPI has played a crucial role in advancing financial inclusion in India.

It says the UPI adoption is estimated to surge from 35% in FY 21 to 75% in the next five years, and the value of digital payments in India is expected to treble from $3 trillion today to $10 trillion by 2026, according to BCG.