Prepaid cards issued by fintech firms such as Slice, Uni and LazyPay have dropped after the banking regulator barred the industry from loading credit lines on to wallets and other such prepaid payment instruments (PPIs), reported Economic Times.
Fintech players Uni and PayU-owned LazyPay have completely stopped issuing new prepaid cards because of the lack of regulatory clarity. Both these companies, however, continue to support existing cardholders and are working to forge new partnerships with lenders to ensure business continuity, they said.
Before RBI’s June order, the fintech industry collectively issued close to 500,000-700,000 new prepaid cards in May, which has now dropped to less than 1,00,000, reported ET.
This includes buy-now-pay-later credit providers as well as so-called ‘challenger' credit card firms.
“In July so far, new card issuances by these fintech firms have fallen to one-tenth the level prior to the RBI mandate. However, customer acquisition continues. There will be a slowdown in new issuances till there is clarity over the regulations,” said one fintech executive.
Slice, a fintech unicorn, continues to add new customers in association with SBM Bank. However, sources said, issuances have dropped drastically as it consults with the regulator on the way forward. At its peak, Slice was issuing up to 200,000 cards each month as of May-end, compared to 20,000 during the start of the year, the sources added.
A spokesperson for PayU said it had stopped onboarding new customers for its LazyCard. “Support for existing customers continues and is in line with the latest guidelines from RBI,” the spokesperson said, adding that the company had cross-sold close to 100,000 LazyCards per month to its existing LazyPay customer base.
The Payments Council of India (PCI), an industry grouping under the broader umbrella of the Internet and Mobile Association of India, recently urged the government to resolve the outcome from RBI’s latest directive.
PCI pegged the total active prepaid cards industry at over 10 million.