Zomato cancels investment in fintech arm; PA, wallet license handed over to RBI

Story continues below advertisement

Foodtech major Zomato wrote down an investment of Rs 39 crore in its fintech subsidiary Zomato Payments Pvt Ltd (ZPPL) during the March quarter.

Furthermore, the filing revealed that the fintech arm surrendered its recently secured online payment aggregator (PA) and prepaid payment instrument (PPI) licenses to the Reserve Bank of India (RBI) stating that the company has no business in the payments sector. not visible. As commercially viable.

Story continues below advertisement

“The company has conducted impairment assessment under Ind AS 36 and recognized a loss of Rs 39 crore in profit and loss
Account on its investment in ZPPL (as extraordinary item),” the filing read.

Zomato said the payments landscape in the country has evolved over the years since it applied for these licenses, and it does not see the payments business being commercially viable at this time.

“We do not believe that we will have any significant competitive advantage over incumbents in the payments sector and therefore we do not consider it to be commercially viable for us to operate in the payments sector at this stage. While we were mindful of these developments as they emerged “The actual impact was more pronounced as we got closer to putting the structure in place to begin operations,” the company said in an exchange filing on May 13.

Story continues below advertisement

The license allowed Zomato to process online payments itself and provide services like wallet, cash cards, etc. to its customers, giving it more internal control over third-party apps as well as digital payments. The idea was to reduce costs associated with both third-party payment services, gateways and payment apps, and save on merchant fees.

Zomato said ZPPL's ​​other operations will continue and the development will not have any material impact on the firm's revenue or operations.

The online food and grocery delivery major had incorporated ZPPL in August 2021 with an authorized share capital of Rs 20 crore.

Story continues below advertisement

Last year, the company launched its Unified Payments Interface (UPI) offering, called Zomato UPI, in partnership with ICICI Bank.

Leave a Comment

“The Untold Story: Yung Miami’s Response to Jimmy Butler’s Advances During an NBA Playoff Game” “Unveiling the Secrets: 15 Astonishing Facts About the PGA Championship”