RBI approves Zomato payments to operate as an online payment aggregator; Here's what you need to know

Foodtech giant Zomato's subsidiary Zomato Payments Private Limited has been authorized by the Reserve Bank of India (RBI) to operate as an online payment aggregator.

The approval, which is effective from January 24, 2024, will allow Zomato to facilitate e-commerce transactions through its platform.

The company informs in an exchange filing

Pursuant to our earlier disclosure dated August 4, 2021 regarding the incorporation of Zomato Payments Private Limited (“ZPPL”), a wholly owned subsidiary of Zomato Limited (“the Company”) to carry out the business, inter alia, as payment aggregator and issuer of pre-paid payment instruments, we wish to inform that ZPPL has been granted certificate of authorization dated January 24, 2024, from the Reserve Bank of India (“RBI”) to operate as an ‘Online Payment Aggregator’ in India with effect from January 24, 2024, as per the guidelines issued by the RBI, the company informed in an exhange filing.

Zomato's journey to payment aggregation

Zomato's journey towards becoming a payment aggregator began with its partnership with ICICI Bank last year, when it launched Zomato UPI.

Zomato did this as it wanted to reduce reliance on third-party payment apps like Google Pay, PhonePe and Paytm and save on merchant charges. The company emphasized the convenience and security of this feature, allowing users to make payments seamlessly within the Zomato app.

Impact on Zomato's business model 

With the RBI's approval, Zomato joins the ranks of Tata Pay, Razorpay, and Cashfree, who have also secured payment aggregator licenses. Notably, The license is expected to enhance Zomato's business model, allowing it to process payments for its e-commerce transactions more efficiently.

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