Zomato Payment Aggregator Business approved by RBI

 

Zomato, a prominent player in the food delivery sector, has achieved a significant milestone by securing approval from the Reserve Bank of India (RBI) to function as a payment aggregator and an issuer of pre-paid payment instruments.

The positive development was announced in a stock exchange filing on Thursday, with the authorisation effective from January 24, 2024. This approval comes from Zomato’s strategic efforts to comply with RBI regulations, including establishing a wholly-owned subsidiary named Zomato Payments Pvt Ltd in August 2021, which is dedicated to payment aggregator and payment gateway services.

It’s worth noting that the recent notification from RBI does not explicitly mention the payment gateway aspect. Zomato had previously collaborated with ICICI Bank in May of the previous year, leading to the introduction of Zomato UPI, a unified payments interface solution.

Initially introduced to select users without a KYC process, this feature aimed to simplify the payment process within the Zomato platform.

With this approval, Zomato joins the ranks of leading online payment aggregation platform players, standing alongside companies like Razorpay, Cashfree, Open, and Enkash.

Zomato’s journey has witnessed a remarkable turnaround, culminating in achieving profitability for the first time in the first quarter of FY24.

The company’s profit after tax experienced a staggering 18-fold increase to Rs 36 crore in the second quarter of the current fiscal year (Q2 FY24).

In the September quarter, Zomato demonstrated an impressive 18% growth in revenue, reaching Rs 2,848 crore, up from Rs 2,416 crore in the preceding June quarter.

This growth trajectory underscores the company’s resilience and adaptability in a dynamic market.

Reviewing the company’s performance, Zomato’s share price, which peaked at around Rs 155 in November 2021, fell below Rs 50 in July 2022. However, the firm is regaining momentum with robust financials and a positive bottom line.

Zomato’s share price currently hovers around Rs 136, reflecting a substantial recovery. The company’s market capitalisation now exceeds Rs 1,17,000 crore or $14 billion, reaffirming its position as a significant player in the industry.

This RBI approval validates Zomato’s commitment to regulatory compliance. It positions it strategically in the evolving landscape of digital payments, offering new avenues for growth and expansion beyond its core food delivery business.

As Zomato continues diversifying its offerings, the approval signifies a step forward in establishing itself as a comprehensive player in the broader digital ecosystem.