Fintech major MobiKwik’s application to operate Zaakpay as a payment aggregator has been rejected by the Reserve Bank of India, two people with knowledge of the matter told Business Today.
Following this, the Gurugram-based firm, which has approval from India’s market regulator for its Rs 1,900 crore IPO, will not be able to onboard new merchants and existing merchants who offer Zaakpay as a payment gateway will get 180 days to stop using it, the sources said.
The sources have also said that one of the key reasons behind RBI’s rejection of the payment aggregator’s licence could be because of MobiKwik’s support to cryptocurrency exchanges via Zaakpay.
RBI’s rejection comes on the heels of various Indian crypto exchanges disabling the usage of Unified Payments Interface (UPI) services on their platform. The National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems, had recently come out with an official statement stating that the organisation was “not aware of any crypto exchange using UPI”. Days after NPCI’s clarification, UPI services were disabled across various Indian crypto exchanges.
MobiKwik was one of the popular e-wallets services on cryptocurrency exchanges. The sudden suspension of UPI services also has left these exchanges in a lurch, which are now resorting to peer-to-peer transfer and agreements with a few selected banks for crypto trading.
MobiKwik declined to comment on our queries. RBI did not immediately respond to a request for comment. The story will be updated as and when the central bank responds.
MobiKwik’s business is divided into three segments comprising of ‘Buy Now Pay Later’ or BNPL, consumer payments or wallet, and its payment gateway which is Zaakpay.
Founded in 2009 by the husband-wife team of Bipin Preet Singh and Upasana Taku, MobiKwik introduced Zaakpay as its payment gateway in 2012 to enable websites and apps to collect payments from their users using multiple options, including debit and credit cards, mobile wallets, UPI and net banking.
Sources also say that this recent development can affect the IPO plans of the company, which have already been delayed due to the ongoing downturn in the stock market.
In its Draft Red Herring Prospectus, the company had stated: “While our consumer payments and BNPL segments significantly rely on Zaakpay’s services for processing payments within the MobiKwik ecosystem. In fiscals 2019, 2020 and 2021, our payment gateway costs to Zaakpay amounted to Rs 646.61 million, Rs 1,428.82 million and Rs 1,397.26 million, respectively. Accordingly, any disruption in the functioning of Zaakpay, even if caused due to factors completely external to us, can adversely affect the operations of our MobiKwik Wallet and BNPL products, including MobiKwik Zip, as well as our brand and reputation.”