Zomato Says No To RBI License, What It Means for the Food Tech Giant?

Once, Zomato aimed to venture into the fintech industry by becoming a payment aggregator. It established a subsidiary called Zomato Payment Private Limited (ZPPL) in 2011. Interestingly, Zomato received approval from the Reserve Bank of India, obtaining an RBI License in January 2024.

However, in a recent development, Zomato has decided not to proceed with its plan to become a payment aggregator platform. It has promptly surrendered the certification granted by the RBI for operation as an online payment aggregator.

Zomato Payment Aggregator Platform... What Next?

The subsidiary in question, Zomato Payment Private Limited (ZPPL), has opted to voluntarily surrender not only its authorization from the RBI but also its application for operating as an issuer of prepaid payment instruments. However, it's important to note that this decision does not affect other operations of ZPPL, which will continue as usual.

This development comes on the heels of Zomato's recent foray into the payment aggregation sphere, with the RBI granting it the license in January 2024. Zomato had originally established ZPPL in 2021, positioning it as a wholly-owned subsidiary to facilitate payment aggregation and prepaid payment instrument issuance.

Zomato's Financial Implications and Performance

Despite the strategic shift in its payment aggregation strategy, Zomato continues to demonstrate strong financial performance. The company reported its fourth consecutive profitable quarter in Q4 FY24, with a notable 27% quarter-on-quarter surge in profit after tax (PAT) to INR 175 Cr. However, operating revenue growth was more subdued at 8% QoQ and 73% YoY.

While Zomato's B2C business, comprising food delivery and quick commerce, witnessed a 51% YoY growth in gross order value (GOV), there was a slight dip in the GOV of its core food delivery vertical in the reported quarter. Despite this, the average monthly transacting customers for food delivery saw a modest increase.

Deepinder Goyal, CEO of Zomato, emphasized the strategic rationale behind the company's recent acquisitions and operational decisions during the Q4 earnings announcement. However, despite the positive financial outlook, Zomato's shares experienced a temporary setback, declining by 3.8% on the BSE post-announcement.

Zomato's decision to surrender its RBI license reflects a nuanced approach to its operational strategy, balancing growth opportunities with market dynamics. As the company navigates evolving consumer preferences and competitive landscapes, its ability to adapt and innovate will remain pivotal in sustaining its leadership in the food tech industry.

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