2024-05-15 By Surbhi Chauhan General

Zomato Revises Investment in Fintech Division; renounced Payment Authority and Wallet License to RBI

Zomato, the prominent player in the foodtech industry, has reported a write-down of Rs 39 crore in investment in its fintech subsidiary, Zomato Payment Private Limited (ZPPL), during the March quarter. This decision was revealed through recent filings, which also disclosed that the fintech arm has surrendered its online payment aggregator (PA) and Prepaid Payment Instrument (PPI) licenses to the Reserve Bank of India (RBI). The reason cited for this surrender was Zomato's assessment that the payments space was not commercially workable for its business.

According to the filings, the company underwent an impairment assessment under Ind AS 36, leading to the recognition of a Rs 39 crore deficiency loss in the profit and loss account as an exceptional item on its investment in ZPPL. Zomato stated that the payment landscape in the country has evolved significantly since it applied for these licenses, and it no longer sees itself having a competitive advantage in the payments space.

In an exchange filing on May 13, the company expressed its stance: "We do not see ourselves having a significant competitive advantage against the incumbents in the payments space and hence we don’t foresee a business in payments space as commercially viable for us, at this stage." The submission of licenses allowed Zomato to process online payments independently and offer various services such as wallets and cash cards to its customers, aiming to gain more control over digital payments while reducing costs associated with third-party services.

Zomato assured that the other operations of ZPPL would continue unaffected, with no material impact on the revenue or operations of the firm. ZPPL was incorporated in August 2021 with an authorised share capital of Rs 20 crore. Notably, Zomato had introduced its own Unified Payments Interface (UPI) offering, named Zomato UPI, in partnership with ICICI Bank last year, showcasing its commitment to the digital payments space despite the recent developments.