Zaakpay Secures RBI Approval To Operate As Payment Aggregator

Zaakpay, a fully owned arm of MobiKwik, has received the Reserve Bank of India’s (RBI) nod to work as an online payment aggregator. Approval was granted under the Act of 2007 that governs payment and settlement systems in India. With that, Zaakpay can now act as a legal intermediary to help merchants and customers alike carry out digital transactions.

This milestone represents a significant advancement for the fintech company that received in-principle approval from the RBI in October 2021. The process involved to reach here was comprehensive,  not only were the company's systems and the cybersecurity of its platform thoroughly audited, but also the central bank had a number of additional inquiries that needed to be addressed. Over the past year, the company has worked to meet all the requirements laid out by the RBI. Until now, Zaakpay had been banned from onboarding new merchants because its application had been previously rejected in 2022.

Strengthening MobiKwik’s Core Payments Infrastructure

For a long time, Zaakpay has powered MobiKwik's payment and financial services platforms. As the company's regulatory filings make clear, any hiccup in Zaakpay's operations would directly hit MobiKwik's key offerings, such as MobiKwik ZIP and ZIP EMI. The recent authorisation removes a major regulatory bottleneck the company had encountered and lets Zaakpay get on with growing and integrating more deeply into the MobiKwik ecosystem.

Although Zaakpay was set up in 2011 to handle digital payments, its performance in recent years has taken a toll on the revenue of parent company MobiKwik. With the RBI giving its nod of approval, Zaakpay now has an opportunity to snatch back some of that lost revenue.

Business Revival Amid Competitive Fintech Landscape

MobiKwik looks to the Reserve Bank of India for help in regaining non-judgmental financial standing. The fintech firm is preparing to make public its Q4 FY25 financials, and it has publicly declared losses for three consecutive quarters. In Q3 FY25, MobiKwik posted a net loss of 55.2 crore INR, trading in the red compared to a profit of 5.3 crore INR in the same period a year earlier. Yet, in a contradiction that seems to be the firm's new normal, revenue rose 18 percent year on year to 269.5 crore INR, hinting at operational growth despite pressures on profitability.

Now that Zaakpay has received regulatory clearance, it can go back to acquiring new merchants and ramping up its transaction volumes. For MobiKwik, this is a strategic win in the digital payments sector, where it is competing against a number of well-funded rivals. This is especially true given that, as we recently reported, regulatory compliance has become something of a sticking point for many companies that are hoping to operate in this space.

As MobiKwik reestablishes itself, it has been venturing into such adjacent fields as brokerage, insurance, and alternate non-banking financial services. These are part of a broader effort to reconstitute their revenue mix to build alternative revenue streams and reduce reliance on core payments.