Fintech CRED secures in-principle approval for payment aggregator license

CRED has received the in-principle approval for payment aggregator license in a boost to the Indian fintech startup that could help it better serve its customers and launch new products and experiment with ideas faster.

The Bengaluru-headquartered startup, valued at $6.4 billion, received the in-principle approval from the Reserve Bank of India for the payment aggregator license this week, according to two sources familiar with the matter.

CRED didn’t immediately 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 essential in facilitating online transactions by acting as intermediaries between merchants and customers. The RBI’s approval enables 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, and these players may not prioritize such mandates. Obtaining a license allows 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 can also allow CRED to make itself available to more merchants and “generally be everywhere their customers shop,” an industry executive said.

The in-principle license approval to CRED follows the Indian central bank cracking down on many fintech business practices in recent quarters and generally growing cautious of granting licenses of any kind to businesses. In a stunning move, the Reserve Bank of India ordered Paytm Payments Bank earlier this year to halt most of its businesses.

CRED — which counts Tiger Global, Coatue, Peak XV, Sofina, Ribbit Capital and Dragoneer among its backers — serves a large chunk of India’s affluent customers. It originally launched six years ago with the feature to help members pay their credit card bills on time, but has since expanded its offerings with loans and several other products. In February, it announced it had reached an agreement to buy mutual fund and stock investment platform Kuvera.