Policybazaar Parent Company PB Fintech Ventures into Payment Aggregation

PB Fintech, the parent company of leading insurance marketplace Policybazaar, announced plans to enter the payment aggregation business on Wednesday, March 20th. This action represents the company’s strategic growth.

PB Pay Poised to Offer Payment Solutions

A regulatory filing revealed PB Fintech’s intention to establish a wholly-owned subsidiary named PB Pay Private Limited. This subsidiary will focus on providing payment aggregation services, encompassing both domestic and potentially cross-border transactions, subject to approval from the Reserve Bank of India (RBI). PB Pay will facilitate offline and/or digital payment acceptance infrastructure for merchants.

According to the filing, “The Board of Directors… has approved the incorporation of a wholly-owned subsidiary of the Company under the name and style of ‘PB Pay Private Limited’ to carry on the business of payment aggregator…”

Capital Structure and Regulatory Landscape

A paid-up share capital of INR 27 crore and an authorized share capital of INR 50 crore will be used to form PB Pay. It’s important to note that the RBI introduced the payment aggregator framework in March 2020. Obtaining a license from the central bank is mandatory for companies aiming to acquire merchants and provide them with digital payment acceptance solutions.

Heightened Scrutiny by RBI

PB Fintech’s venture into payment aggregation coincides with a period of increased scrutiny by the RBI. The central bank has implemented stricter compliance requirements for issuing these licenses.

In September 2023, the RBI rejected the payment aggregator license applications of 72 startups, including existing license holders. The RBI’s past concerns have included companies not meeting the minimum net worth criteria or failing to conduct proper system and cybersecurity audits.

RBI Approvals Granted to Select Players

Despite heightened scrutiny, the RBI has granted licenses to several players recently. Infibeam Avenues and Amazon Pay received their licenses earlier this month. MSwipe, Zoho, Juspay, and Decentro are among other companies that have secured RBI approval.

Profitable Quarter Fuels Expansion

PB Fintech’s foray into payment aggregation comes at a time of financial success for the company. The company reported its first profitable quarter in Q3 FY24, with a profit after tax (PAT) of INR 37.2 Crore compared to a loss of INR 87.6 Crore in Q3 FY23. Additionally, operating revenue for Q3 FY24 saw a 43% year-on-year increase to INR 871 Crore.

The announcement of PB Pay’s establishment was positively received by the market. On March 20, Wednesday, PB Fintech’s shares closed 1.73% higher at INR 1,116.85 on the BSE.