Cred can operate as payment aggregator, RBI gives in-principle approval: Report

Fintech unicorn CRED has reportedly got an in-principle approval to operate as a payment aggregator after securing a licence from the Reserve Bank of India (RBI). The Bengaluru-headquartered startup, valued at $6.4 billion, once gets the final approval from the central bank will soon companies, such as Razorpay and Cashfree, that already have the licences, TechCrunch reported quoting two sources.

The Peak XV-backed startup runs a credit card bill payment platform for creditworthy customers. Cred's Cred Pay, in partnership with other payment companies, offers a check-out option to its users on popular e-commerce platforms.

A payment aggregator facilitates online payments for customers and businesses by offering various payment methods like debit cards, credit cards, UPI, and e-wallets. They act as intermediaries to streamline the payment process for their clients.

The RBI introduced the PA framework in March 2020. Acquiring merchants must have a PA license for digital payment solutions. The central bank is actively issuing PA licenses to digital payment players.

Fintech startups need licenses to process payments directly, reduce costs, control payment flow, onboard merchants, and settle funds with merchants. Without licenses, they depend on third-party processors that may not prioritise their needs.

CRED, founded by Kunal Shah in 2018, it is a reward-based credit card payments app. As per industry data for March, Cred was the fourth largest UPI payments application after PhonePe, Google Pay and Paytm. CRED has been actively introducing new products and features like UPI-based P2P payments, scan and pay, CRED escapes, and CRED Flash to boost its revenue. Recently, CRED acquired Kuvera to expand into wealth management.