Zomato now a payment player! Zomato got approval from RBI to work as a payment aggregator

Food delivery giant Zomato has received a green light from the Reserve Bank of India (RBI) to operate as a payment aggregator in India. This significant development, effective January 24, 2024, empowers Zomato to facilitate payments directly through its platform, similar to players like Tata Pay, Razorpay, and Cashfree.

The news comes weeks after Zomato's subsidiary, Zomato Payments Private Limited (ZPPL), applied for the coveted license. With the authorization in hand, Zomato can now offer integrated payment solutions to e-commerce businesses and merchants listed on its platform, eliminating the need for them to set up their own payment infrastructure.

This move holds immense potential for both Zomato and the e-commerce ecosystem in India. It allows Zomato to:

• Reduce dependence on third-party payment apps: Zomato Pay, its UPI offering launched in collaboration with ICICI Bank, can now be widely used for food and grocery orders on both Zomato and Blinkit, its quick commerce arm. This translates to lower transaction fees for merchants and potentially more competitive prices for consumers.
• Enhance customer experience: A seamless, integrated payment experience within the Zomato platform can boost user convenience and drive higher transaction volumes.
• Expand into new avenues: The payment aggregator license opens doors for Zomato to explore beyond food delivery, venturing into other e-commerce verticals and offering its payment solutions to a broader range of merchants.

Zomato's foray into the payment aggregator space aligns with the growing trend of e-commerce platforms aiming to create self-contained ecosystems that cater to every aspect of the shopping journey. This not only improves user experience but also strengthens brand loyalty and potentially unlocks new revenue streams.

However, the road ahead won't be without challenges. Zomato will need to comply with the RBI's stringent regulations for payment aggregators and compete with established players in the market. Nevertheless, armed with its extensive user base, brand recognition, and strategic partnerships, Zomato is well-positioned to carve its niche in the rapidly evolving digital payments landscape of India.

This news is expected to significantly impact the e-commerce landscape in India, paving the way for more streamlined and integrated online shopping experiences for consumers and potentially offering greater convenience and cost-effectiveness for merchants. It will be interesting to see how Zomato leverages this authorization to further solidify its position in the Indian digital economy.