News Update

After RBI regulations prevented the sale of prepaid cards, Uni will now provide co-branded credit cards and loans

• ByStartupStory     |    November 14, 2022

In place of its previous primary product, which offered loans through a co-branded prepaid card, fintech startup Uni Cards has notified clients of its new offerings, which include a co-branded credit card and loans by its lending partners.The Reserve Bank of India’s (RBI) digital lending norms required that loan disbursals and repayments occur directly between the bank accounts of customers and the lender bank or non-banking financial company (NBFC), without the presence of a third party account or fintech in the middle. As a result, the startup, backed by Lightspeed and General Catalyst, overhauled its product offerings.

The standard destroyed the prepaid payment instrument (PPI) lending model, which included wallets and prepaid cards a move that had an effect on the business strategies of participants including Uni, Slice, PayU’s LazyPay, Paytm Postpaid, and BharatPe’s PostPe, among others. November 30 is the cutoff date for following these guidelines.

According to a RBI client notice that Moneycontrol analyzed, services for the formerly-available prepaid card will expire on December 1, 2022. To be clear, Uni had previously declared on August 19 that, in light of the August 10 announcement of digital lending regulations, it had made the proactive decision to halt card services on its products, the Uni Pay 1/3rd Card and the Uni Pay 1/2 Card.

Your SBM Bank (prepaid) card will be temporarily stopped, but be sure to keep it secure. Your credit line is still in use. So, Uni Cash continues to operate normally. The easiest method for moving money from your credit line to your bank account is to: “read the customer letter from Uni. Uni Cash is a loan product that allows the startup’s lending partners to disburse loans straight to the customer’s bank account. In RBI response to inquiries from Moneycontrol, Uni declared that the new items had begun to be sold.

“We have witnessed a lot of support for the Uni Pay 1/3rd Card (and Pay 1/2 Card) along the way. The popularity of these items only encouraged us to keep inventing and providing customers with fresh options. However, our BNPL products are impacted by the recent RBI regulations on digital lending. And in order to comply, we made the difficult decision to halt services for our Beginning on December 1, 2022, pay 1/3rd card (and pay 1/2 card), according to the startup. Uni also stated that it will also provide co-branded Visa credit cards under the name Uni NX Wave, which would provide 1% cashback for each purchase, up to 5x rewards at Uni Store, and 0% FX markup.

The second new item offered by Uni is Paycheck Pro, which gives clients the option of receiving an interest-free deposit in the middle of the month in advance of their income, which will be credited at the end of the month. According to Moneycontrol, university students may be eligible for a deposit of up to Rs 50,000 depending on their creditworthiness.Several fintech companies provide this service to consumers in an effort to let them control their spending in the middle of the month. Once they earn their wage, customers can reimburse the deposit. “The goal of this subscription-based early paycheck solution is to assist customers in managing their monthly financial flow. The programme gives customers the option to halt their subscription at any moment and offers flexible dates on which money may be sent into their bank accounts “In its statement, Uni stated.

Nitin Gupta, a co-founder of Uni and a former CEO of PayU, founded the company in 2020. After raising $70 million in Series A funding in December 2021 under General Catalyst’s leadership, Uni is now valued at $350 million. Slice and Uni suffered the most from RBI’s regulations asTheir main method of doing business has been lending via prepaid cards.

About RBI

RBI Bank India, which had collaborated with the majority of these fintechs for their prepaid cards and wallets, instructed them to halt onboarding new users for these products after the release of the digital lending guidelines in August.

On October 29, Slice also announced its decision to stop lending through its co-branded SBM Bank India prepaid card and start lending directly to customers’ bank accounts. Slice added that customers could use a prepaid wallet called Slice Mini to load their own money—not loans or credit lines—into the company’s flagship prepaid card and use it for regular transactions, turning it more into a debit device.

The crackdown occurred at a time when the fintech industry, which had made millions of dollars over the previous two years, was facing a challenging funding environment. Numerous fintech companies attempted to raise additional funds in 2022, but were unsuccessful due to the macroeconomic uncertainty and the RBI’s crackdown.

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