CRED has received the in-principle approval for a payment aggregator license, boosting the Indian fintech startup to better serve its customers, launch new products, and experiment with ideas faster.
The Bengaluru-headquartered startup, valued at $6.4 billion, obtained the in-principle approval from the Reserve Bank of India for the payment aggregator license this week, according to sources familiar with the matter.
CRED has yet to respond to a request for comment.
The RBI has granted in-principle approval for payment aggregator licenses to several 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 following the in-principle approval.
Payment aggregators are crucial in facilitating online transactions by acting as intermediaries between merchants and customers. The approval from the RBI allows fintech firms 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, which may not prioritize such mandates. Obtaining a license enables fintech companies to process payments directly, reduce costs, gain greater control over payment flow, and onboard merchants directly. Additionally, payment aggregators with licenses can settle funds directly with merchants.
A license also allows CRED to reach more merchants and be present where their customers shop, according to an industry executive.
The in-principle license approval for CRED comes after the Indian central bank tightened regulations on many fintech business practices in recent quarters and became more cautious about granting licenses to businesses. Earlier this year, the Reserve Bank of India directed Paytm Payments Bank to halt most of its operations.
CRED, backed by investors like Tiger Global, Coatue, Peak XV, Sofina, Ribbit Capital, and Dragoneer, caters to a significant portion of India’s affluent customers. Initially launched to help members pay their credit card bills on time six years ago, CRED has expanded its offerings to include loans and other products. In February, the company announced an agreement to acquire mutual fund and stock investment platform Kuvera.
