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Context is everything.
Detailed stories on technology startups, business and economic current affairs.
Detailed stories on technology startups, business and economic current affairs.
The industry is divided on the implications of a new rule on prepaid cards and wallets, but it looks like most pay later business models no longer work.
Editor's note: A clarification on the prepaid payment instrument rules issued by the central bank to digital wallet companies late on Monday night has sent India’s fledgling but well-funded buy now pay later sector into a spiral and for all the right reasons. From the circular (not yet uploaded on the RBI website): “The [Prepaid Payment Instruments - Master Directions] does not permit loading of PPIs from credit lines. Such practice, if followed, should be stopped immediately. Any non-compliance in this regard may attract penal action under provisions contained in the Payment and Settlement Systems Act, 2007.” According to four industry executives, the implications of this clarification are severe. “It serves a knockout punch for the business model of most, if not all, variations of buy now pay later products currently serving the market,” says the chief executive of a fintech firm partnering with multiple BNPL startups. A prepaid payment instrument, or PPI, is industry speak for digital wallets and prepaid cards. Several pay later companies, such as Slice, Uni and Dhani, offer credit card challengers, which are essentially zero-value prepaid cards …
The industry is divided on the implications of a new rule on prepaid cards and wallets, but it looks like most pay later business models no longer work.
Editor's note: A clarification on the prepaid payment instrument rules issued by the central bank to digital wallet companies late on Monday night has sent India’s fledgling but well-funded buy now pay later sector into a spiral and for all the right reasons. From the circular (not yet uploaded on the RBI website): “The [Prepaid Payment Instruments - Master Directions] does not permit loading of PPIs from credit lines. Such practice, if followed, should be stopped immediately. Any non-compliance in this regard may attract penal action under provisions contained in the Payment and Settlement Systems Act, 2007.” According to four industry executives, the implications of this clarification are severe. “It serves a knockout punch for the business model of most, if not all, variations of buy now pay later products currently serving the market,” says the chief executive of a fintech firm partnering with multiple BNPL startups. A prepaid payment instrument, or PPI, is industry speak for digital wallets and prepaid cards. Several pay later companies, such as Slice, Uni and Dhani, offer credit card challengers, which are essentially zero-value prepaid cards …
The Rs 250 SIP was launched last year by the former SEBI chairperson with one clear goal: financial inclusion. More than a year later, the much-hyped scheme doesn’t seem to have caught on with MF investors.
The central bank’s shift to a 100% collateral requirement threatens to erode leverage, reduce volumes and force a consolidation across prop desks.
High returns, RBI-regulated comfort, and easy withdrawals drew investors in. Now, with repayments drying up, the fintech platform, its NBFC partner, and the regulator are pointing fingers—leaving customers to chase their own money.
The Rs 250 SIP was launched last year by the former SEBI chairperson with one clear goal: financial inclusion. More than a year later, the much-hyped scheme doesn’t seem to have caught on with MF investors.
The central bank’s shift to a 100% collateral requirement threatens to erode leverage, reduce volumes and force a consolidation across prop desks.
High returns, RBI-regulated comfort, and easy withdrawals drew investors in. Now, with repayments drying up, the fintech platform, its NBFC partner, and the regulator are pointing fingers—leaving customers to chase their own money.
