Jio Payment Solutions Receives RBI Approval For Online Payment Aggregation

As Paytm faces restrictions that limit its financial services arm from onboarding new customers, Jio has a unique opportunity to capture a significant share of the digital financial services market

Jio Payment Solutions Limited (JPSL), a subsidiary of Jio Financial Services (JFS), announced on Tuesday that it has received approval from the Reserve Bank of India (RBI) to operate as an online payment aggregator. The authorization, effective October 28, 2024, allows JPSL to facilitate digital transactions in accordance with Section 7 of the Payment and Settlement Systems Act, 2007. Following this announcement, shares of Jio Financial Services rose to Rs 321.45, reflecting a 1.45 per cent increase on Tuesday.

As Paytm faces restrictions that limit its financial services arm from onboarding new customers, Jio has a unique opportunity to capture a significant share of the digital financial services market.

Jio Payments Bank, also part of JFS, currently provides digital savings accounts with biometric access and a physical debit card. This service caters to over 1.5 million active users who depend on it for their daily transactions. Building on this foundation, JFS plans to expand its banking offerings, enhancing the Jio Payments Bank’s savings account platform.

In FY24, Jio, equipped with a range of licenses for lending, insurance broking, and payment aggregation, processed approximately 1.8 million UPI payments in April 2024 alone, highlighting its ambition to establish itself as a significant player in the digital finance sector.

While cash accounted for approximately 60 per cent of consumer spending as of March 2024, an RBI study shows that this trend has been steadily declining since the Covid-19 pandemic. Meanwhile, digital payments, especially through UPI, have experienced significant growth, with transaction volumes increasing from 14-19 per cent in 2021 to 40-48 per cent by 2024.

The study's Cash Usage Indicator (CUI) revealed a decrease in cash usage, particularly for high-value purchases, while highlighting UPI's growing significance in merchant payments. In FY 23-24, UPI accounted for 69 per cent of the transaction value and 87 per cent of the transaction volume.