Zomato, one of the leading food delivery platforms in India, has received the green light from the Reserve Bank of India (RBI) to operate as an online payment aggregator. The company announced this development in a stock exchange filing on Monday.
What does this mean for Zomato?
Zomato Payments Private Limited, a wholly owned subsidiary of Zomato Limited, has been granted a certificate of authorization from the RBI to operate as an ‘Online Payment Aggregator’ in India with effect from January 24, 2024. This means that Zomato can now process online payments from customers and merchants on its platform, as well as issue prepaid wallets.
According to the RBI guidelines, online payment aggregators are entities that facilitate e-commerce sites and merchants to accept various payment instruments from customers for completion of their payment obligations. They also need to comply with certain capital, governance, operational, and security requirements.
Zomato said that it will operate the online payment aggregator business through its subsidiary Zomato Payments Private Limited. The company did not disclose any further details about its plans or strategies for this segment.
How will this benefit Zomato?
Zomato’s entry into the online payment aggregator space is expected to boost its revenues and margins, as well as enhance its customer and merchant experience. The company can leverage its existing user base and network of restaurant partners to offer seamless and secure payment solutions.
Zomato can also use its payment infrastructure to support its other businesses, such as dining out, Blinkit, Hyperpure, etc. The company can also explore new opportunities and partnerships in the fintech space, such as lending, insurance, loyalty, etc.
Zomato’s move comes at a time when the online food delivery market in India is witnessing strong growth and competition. According to a report by RedSeer, the online food delivery market in India is expected to grow at a compound annual growth rate (CAGR) of 30% to reach $12 billion by 2024. Zomato and its rival Swiggy are the dominant players in this space, with a combined market share of over 90%.
Who are the other players in the online payment aggregator space?
Zomato is not the only entity to have received the RBI’s nod to operate as an online payment aggregator. In the past few months, the central bank has given final approval to 11 entities, including Stripe, Google Pay, Razorpay, Cashfree, Enkash, and Open Financial.
These entities have to compete with the existing players in the online payment aggregator space, such as Paytm, PayU, PhonePe, Amazon Pay, etc. The online payment aggregator space in India is highly fragmented and competitive, with multiple players offering different value propositions and features.
According to a report by PwC and Assocham, the digital payments market in India is expected to grow at a CAGR of 27% to reach $1.3 trillion by 2024. The report also said that the online payment aggregator segment is expected to grow at a CAGR of 35% to reach $280 billion by 2024.