Food delivery firm Zomato has voluntarily surrendered the certificate of authorisation issued by the Reserve Bank of India (RBI) to operate as an online payment aggregator as the company doesn't see it having a significant competitive advantage against the incumbents in the payments space.
The board of Zomato Payments Private Ltd has decided to withdraw the application dated November 11, 2021, submitted with the banking regulator to operate as the issuer of pre-paid payment instruments.
Thanks to RBI’s efforts, the payments landscape in India has evolved meaningfully over the past couple of years since the time Zomato applied for these licences, Zomato says in a regulatory filing. “This has over time, therefore, resulted in a seamless payment experience for customers,” it says.
“At Zomato, 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 food ordering company says.
“While we were conscious of these developments as they unfolded, the real impact was more apparent as we got closer to putting in place the structure to commence the operations,” Zomato says, adding that there is no material impact on the revenue operations of the company on account of such voluntary surrender and withdrawal.
The surrender comes over three months after Zomato’s wholly-owned subsidiary Zomato Payments received approval from the RBI to operate as an online payment aggregator.
The food delivery giant reported a net profit of ₹175 crore for the quarter ended March 31, 2024, compared with ₹188-crore loss in the same quarter a year ago.
Revenue from operations rose 73% year-on-year to ₹3,562 crore for the fourth quarter as against ₹2,056 crore in Q4 FY23. For the full financial year 2023-24, Zomato logged a profit of ₹351 crore from a loss of ₹971 crore in FY23.
The top line growth was driven by robust performance by food delivery service and quick commerce platform Blinkit. Zomato's food delivery business reported revenues of ₹1,739 crore in Q4 FY24, up from ₹1,172 crore in the year-ago period. The quick commerce business revenue stood at ₹769 crore during the quarter compared with ₹363 crore posted in Q4 FY23.
“We are just grateful that the bet that we took on Blinkit worked out just fine and we are not at a point where Akshant and I are getting fired for an expensive acquisition gone wrong. We are also grateful to our Board, for believing in the distant bet we were taking at that time, and helping us bring it all together quickly over the last few quarters,” says Deepinder Goyal, CEO, Zomato.
