MobiKwik’s digital payments arm, Zaakpay, has received the Reserve Bank of India’s (RBI) final approval to function as an online payment aggregator. This regulatory nod marks a significant milestone for the fintech company, enabling Zaakpay to onboard new merchants and expand its presence in India’s fast-growing digital payments sector.
What Does the RBI Approval Mean for Zaakpay?
With this authorisation, Zaakpay can now process and aggregate digital payments for businesses, acting as a vital intermediary between merchants and customers. The approval, granted under the Payment and Settlement Systems Act, 2007, comes after a rigorous two-year review process by the RBI. Zaakpay had previously received in-principle approval in October 2023 and had to fulfil strict compliance requirements, including a system audit and cybersecurity checks.
Zaakpay’s Journey: From Setback to Comeback
Zaakpay, founded by MobiKwik in 2011, was initially set up as a payment gateway to help businesses accept digital payments. The platform supports over 100 payment modes, including credit cards, debit cards, net banking, UPI, and wallets. However, in 2022, Zaakpay’s application for a payment aggregator licence was rejected due to not meeting the RBI’s net worth criteria, resulting in a ban on onboarding new merchants. This led to a sharp decline in Zaakpay’s contribution to MobiKwik’s revenue-from 33.94% in FY22 to just 0.95% in FY24.
Undeterred, MobiKwik infused capital into Zaakpay, re-applied for the licence, and addressed all regulatory queries. The final approval now positions Zaakpay to regain lost ground and pursue aggressive business expansion.
Impact on MobiKwik’s Business and Growth Strategy
Zaakpay’s regulatory clearance is a strategic win for MobiKwik, especially as the company’s payments and financial services ecosystem heavily depends on Zaakpay’s capabilities. The approval comes at a crucial time, with the RBI having restricted several major payment gateways from onboarding new merchants, creating an opportunity for Zaakpay to capture market share.
MobiKwik has also been diversifying its business, venturing into brokerage, insurance, and launching a wholly owned NBFC subsidiary to offer loans and other financial products. The company’s registered user base has grown to 172 million, with a merchant network of 5 million.
Financial Performance: Challenges and Opportunities
Despite strong revenue growth-up 18% year-on-year to ₹269.5 crore in Q3 FY25-MobiKwik has faced financial headwinds, reporting a net loss of ₹55.2 crore in the same quarter, mainly due to lower financial services revenue and higher lending costs. However, the payment business itself saw robust growth, with payment revenues more than doubling year-on-year in Q3 FY25.
What Lies Ahead for Zaakpay and MobiKwik?
With the RBI’s approval, Zaakpay is set to re-enter the payment aggregation space, onboard new merchants, and strengthen MobiKwik’s overall digital payments ecosystem. As the Indian payment gateway market becomes more competitive, Zaakpay’s comeback could help MobiKwik regain its momentum and diversify its revenue streams.