CRED gets in-principle approval from RBI operate as digital payments app: What it means for users

CRED has reportedly received in-principle approval from the Reserve Bank of India (RBI) to operate as a payment app. The development will help the startup for the expansion of its business offerings.

Citing two sources familiar with the matter, a report by TechCrunch said that the Bengaluru-headquartered company, valued at $6.4 billion, received the in-principle approval for payment aggregator licence this week.

In a move to expand its offerings, Zomato's subsidiary Zomato Payments Private Limited (ZPPL) secured a licence from RBI earlier this year to function as an online payment aggregator.

CRED made a move to enter the wealth management space in February by acquiring Kuvera , an online platform. This positions the company to compete with players like Zerodha and Groww.

Kuvera's team and product will continue to operate independently after the acquisition. However, they'll collaborate with CRED's leadership to expand their reach, brand, and distribution network.

Other companies that got in-principle approval by RBI
The RBI has granted in-principle approval for payment aggregator licences to several companies, including Reliance Payment and Pine Labs, over the past year. It is to be noted that the central bank takes nine months to a year to issue full approval after giving a nod in principle.

Payment aggregators are essentially the middlemen of the online transaction world, smoothing things out between businesses and their customers. Getting a licence from the RBI is essential for fintech companies. The RBI’s approval means that these companies can expand their offerings and compete more effectively in the market.

For fintech startups, the RBI licence is necessary because without one, they have to rely on third-party processors for transactions. With an RBI licence, they can process payments directly, reducing costs and gaining greater control over the flow of money.