slice: ‘Card fintech company Slice receives prepaid payments license from RBI’
This comes after the fintech firm came under pressure earlier this year after the banking regulator prevented prepaid cards from being loaded with credit lines.
According to sources, Slice plans to open minimum know your customer (KYC) PPI accounts for teenagers as it looks to expand its user base and target a newer group of users.
The license is also in line to double the offer to its waiting list customers. Previously, Slice issued prepaid cards through a partnership with SBM Bank in India and rode on the latter’s PPI license.
“Slice has received the PPI license from the RBI and the product has also gone live with a few select users. With this, they hope to welcome more users who want to come to Slice,” said one of the people. around 20% of users who wanted to join Slice, but now it can be significantly expanded with the PPI product. It will make it possible to play full stack payment services.”
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RBI guidelines currently allow small PPIs or minimum detailed PPIs to load up to Rs 10,000 per month and not exceed Rs 1.2 lakh during the financial year.
Sources said Slice would tap into the teenage segment with these small PPI accounts that require minimum KYC requirements.
“This will be via minimum KYC which will allow these users to spend up to Rs 10,000 a month as per banking rules. That is also usually the amount they spend in a month,” said the source quoted earlier.
Slice will also issue PPI cards to this new group of users, people familiar with the company’s plan said.
A spokesperson for Slice declined to comment.
As per RBI rules, small PPIs can only be used for the purchase of goods and services, with cash withdrawals or remittances not permitted from the instrument.
In May, Slice said it was adding the Unified Payments Interface (UPI) offering to its product portfolio as it looked to accommodate waitlisted customers through newer products.
The fintech firm said it had 10 million waitlisted customers in May. It was also looking to enable Near Field Communication (NFC)-based payments (contactless payments) on its app.
This was before the RBI issued a memo to fintech firms in June, stopping them from loading PPIs with credit lines.
At its peak last year, Slice had issued 200,000 new cards each month to its user base.
Slice’s plan to target a new group of teenagers puts it in direct competition with several other startups already operating in the segment, including General Catalyst and Sequoia-backed Fampay; former Paytm executives Shankar Nath and Ankit Gera led startup Junio; and Gurugram-based Fyp Money, among others.
Swings through
After temporarily halting operations of its cards last month, Slice has restarted new issuance of cards, one of the sources told ET, requesting anonymity.
Slice had asked users to open prepaid accounts that would be linked to the cards.
According to RBI’s memo, unbundled payments and credit split into two separate lines of business, as opposed to previously providing credit through PPI (or payment cards).
In November, the company revamped its offerings and launched Slice Borrow which allowed users to borrow (a term loan) for a transaction through a few clicks, payable over 12 months with interest.
ET had reported on July 20 that Slice would offer real-time loans to a customer’s bank account, also a departure from the revolving line of credit model it previously operated through its PPI cards.
Despite a significant diversification into payments, Slice’s core business remains credit-based, one of the people quoted earlier told ET.
It had received a non-banking business (NBFC) license in January 2019.
Last month, the company had also launched Slice Mini, a prepaid account that allows users to add and withdraw money.
For full KYC Slice Mini users, the cumulative transactions are limited to Rs 2 lakh in a day, Rs 10 lakh in a month and Rs 30 lakh in a year, according to FAQs on the company’s website.
Recent regulatory changes, including new digital lending guidelines from the RBI, have dampened the fundraising sentiment of several digital lending fintech firms.
In June, Slice raised $50 million as part of a new round led by existing investor Tiger Global.
It was looking to raise $100 million as part of its fundraising.
ET was the first to report on July 18, citing sources, that with RBI’s memo against card-based fintech firms and greater regulatory uncertainty over digital lending guidelines, Slice had halted its ongoing fundraising.
