Prepaid card issuance by fintechs including Slice and LazyPay drops below 100,000 after RBI directive on PPI
Since the RBI issued the directive, card-based fintech players Uni and PayU-owned LazyPay (through its LazyCard product) are no longer issuing new prepaid cards due to a lack of regulatory clarity. Recently, LazyPay also temporarily discontinued its Buy-Now-Pay-Later (BNPL) payment product LazyPlus UPI.
However, the existing cards are working and Uni and LazyPay continue to support them and are working to forge new partnerships with lenders to ensure business continuity. Two industry executives told the Economic Times that prior to RBI’s order in June, the fintech industry collectively issued nearly 500,000 to 700,000 new prepaid cards in May.
“So far in July, new card issuance by these fintech firms has fallen to a tenth of the pre-RBI mandate level. However, customer acquisition continues. There will be a slowdown in new issuance until the regulations are clarified,” said a fintech executive.
In line with the overall decline in prepaid card issuance, issuance by Bengaluru-based fintech unicorn Slice also fell sharply. At its peak, Slice was issuing up to 200,000 cards a month at the end of May, up from 20,000 at the start of the year, sources said.
It is worth mentioning here that SBM Bank in India is the only lender supporting fintechs as other big lenders like RBL Bank have pulled out of such partnerships.
PCI written to government
A week after the RBI directive, the Payments Council of India (PCI) along with several fintech companies sought government intervention to ask it to resolve the fallout. PCI pegged the industry’s total of active prepaid cards – where a line of credit is disbursed – at over 10 million, with more than Rs 3,500 crore in transactions processed via these cards in May alone.
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“After the RBI circular, the numbers have come down to a trickle…Most of the big players in the portfolio have slowed down or stopped altogether because there is not enough clarity on the regulator’s position. The decline of the numbers is largely due to declining supply from big players such as Slice, which were showing industry-reasonable numbers Card requests fell below one lakh,” an official explained. payments.
Now the business models of card-based fintech companies will evolve into new partnerships, where they might only be able to charge an originator (fee) from banks, while being DSAs (direct selling agents), a source says. of the sector.