CRED Tosses Its Hat In The PA Ring

by · Inc42

SUMMARY

  • CRED’s payment aggregator licence marks another step in its journey from a credit card bill payment app to a full-stack fintech platform
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Adding another feather to its hat, CRED has secured the RBI’s approval to operate as a payments aggregator (PA). With this, the fintech startup will now be able to onboard merchants, process digital transactions, and settle payments across multiple payment instruments such as cards, UPI, and net banking. 

CRED secured an in-principle approval for the PA licence in 2024. Such approvals typically come with a long list of compliance, operational, and technology requirements. 

This also serves as a critical milestone for Tiger Global-backed CRED’s steady push to penetrate deeper into the country’s payments ecosystem. The approval gives the Bengaluru-based startup, which has been gradually expanding its fintech footprint, greater control over how money moves within its ecosystem. 

More than anything, it is a signal that CRED now wants to own and dominate the payments value chain, rather than remaining dependent on third-party infrastructure providers. 

But, while CRED has been pushing to evolve from a credit card bill payment platform into a full-stack fintech superapp, spanning payments, lending and wealth products, why does securing a PA licence matter so much for CRED at this stage of its growth? Let’s explore in this edition of The Outline.

The Need For A PA License

Until now, CRED largely relied on third-party payment aggregators to process transactions happening on its platform. With a PA licence in place, the startup will now be able to route these transactions through its own payment infrastructure. 

With this, CRED will no longer need to share commissions with external payment aggregators. Instead, a portion of the merchant discount rate (1-2% of the transaction amount), which is currently being shared with third-party players, is expected to have a positive impact on its top line