The Naspersbacked payments major PayU India is shutting down its mobile wallet — PayUMoney — and will focus on its credit-based product LazyPay to push its consumer facing business. Having bought out Citrus Pay in 2016, PayU India ended with two e-wallet entities, after the acquisition. Earlier, Citrus put out an advertisement about transferring its wallet license to PayU.
The development comes at a time when the domestic payments landscape is going through many changes and stand-alone mobile wallet players are finding it difficult to keep their business relevant in the light of the new guidelines introduced by the RBI. The central bank has increased the initial net worth required by wallet firms offering prepaid payment instruments from Rs 2 crore to Rs 5 crore and made Know Your Customer (KYC) mandatory for existing users who keep up to Rs 10,000 in wallets.
In an email sent to users, the company said, “We would like to inform you that the PayUMoney wallet issued by RBL will be closing its services on January 31, 2018. Although we are restricting loading money to PayUMoney wallet from today (January 4) onwards, you can still shop with your saved cards on your favourite brands.” Users of the PayUMoney wallet can transfer the amount to their bank accounts. PayU will continue to offer its m-wallet services through Citrus even though it may not aggressively push it from now on.
Citrus Pay co-founder and PayU India MD Jitendra Gupta confirmed the development. “We will keep the wallet live as long as we see steady use cases but the focus is going to be on credit through LazyPay,” he told TOI. PayU is also slated to bring German credit startup Kreditech to India next financial year, Gupta said. PayU and Citrus Pay operate primarily as an online payment gateway for merchants.
After the merger, PayU has been trying to sharpen its consumer-focused products to tap the growing digital payments usage. LazyPay is part of the effort to draw up a bigger consumer play. It essentially lets a consumer pay later for goods and services purchased online. The company has been focusing on adding new merchants across various sectors where instant credit can be a plug-n-play arrangement. “We are seeing higher traction in this business and majority of our users are transacting at least twice a month,” Gupta said. A consumer can typically make the payment after about 15 days of purchase. ‘Pay Later’ option is being made available by even e-commerce players like Flipkart as consumer credit is being seen an integral way of shoring up transactions.
For consumer-focused payments players, adhering to the RBI guidelines on KYC for their users has been a pain point because only a very small base of consumers is compliant so far. The m-wallet firms have to invest heavily to get the KYC done for users. In fact, Paytm has committed $500 million for KYC compliance needs.