RBI Puts Brakes on Simpl’s Payment Operations, Startup Faces Regulatory Hurdle

For years, Bengaluru-based fintech startup Simpl has positioned itself as the invisible layer that makes online checkouts faster and more seamless. With its promise of “buy now, pay later” convenience, it quietly powered payments for millions of users shopping on platforms like Zomato, BigBasket, and Rapido. But now, the very model that helped Simpl rise to prominence has come under the scanner of India’s banking regulator.

On September 25, the Reserve Bank of India (RBI) directed Simpl to immediately stop all payment operations, citing lack of a mandatory licence under the Payment and Settlement Systems (PSS) Act, 2007.

According to reports, the central bank has taken the view that Simpl’s operations fall under the category of a “payment system” since they involve “payment, clearing, and settlement.” To run such a system in India, companies are required to hold a Certificate of Authorisation—something Simpl does not currently possess.

Troubles for Simpl

The RBI action comes at a time when Simpl is already facing scrutiny from another regulatory body. In July this year, the Enforcement Directorate (ED) filed a complaint against the startup and Sharma for alleged violations of foreign direct investment (FDI) norms. The agency had accused the company of contraventions amounting to ₹913.75 crore under the Foreign Exchange Management Act (FEMA), 1999.

However, Sharma clarified that the RBI’s latest order was unrelated to the ED case. At the time of ED’s probe, Simpl had defended itself by stating that it was primarily operating in the domain of IT and technology services while raising funds.

On next steps, Sharma said the team’s immediate focus was to “get on calls, understand the situation better, and wait for clarification from the RBI.”

How Simpl Built Its Business

Founded in 2015, Simpl has long pitched itself as more than a fintech company—it called itself a checkout enabler. Its model is straightforward yet powerful: instead of entering card details or UPI credentials for every online transaction, a user can simply click “Pay Later with Simpl.”

Here’s how it works:

• Users are given a 15-day interest-free credit window.

• Purchases made across Simpl’s partner network can be repaid in one go after the billing cycle.

• Merchants, not customers, are charged a fee—similar to how card networks collect merchant discount rates.

This approach has drawn parallels with the traditional “Khata” system, where local shopkeepers offered short-term credit to trusted customers.

Over the years, Simpl has scaled this model significantly:

• Works with over 26,000 merchants.

• Serves 7+ million users.

• Has raised over $83 million from global investors such as Green Visor Capital, DIA Investments, Hard Yaka, FJ Labs, Honeycomb Investments, IA Ventures, and Valar Ventures.

• Its biggest fundraising came in October 2021, when it secured about $40 million in a round led by IA Ventures and Valar Ventures.

The Regulatory Cloud Over BNPL

The RBI’s order is not just a story about Simpl—it reflects the broader regulatory heat on payment startups in India. Earlier this month, the central bank released master directions for payment aggregators, expanding its oversight to cover online, offline, and even cross-border players.

For Buy Now Pay Later (BNPL) companies like Simpl, this oversight raises questions about their business structure. Industry experts point out that BNPL platforms in India typically operate in one of two ways:

1. Through their own NBFC licence, allowing them to lend directly.

2. As Lending Service Providers (LSPs), working in partnership with banks or NBFCs.

Simpl, however, built its identity differently—positioning itself as a payments utility rather than a lender. It focused on checkout convenience, not traditional credit. But this very distinction appears to have triggered regulatory concerns.

The RBI’s directive is a significant setback for Simpl, especially as it sits at the intersection of consumer credit, payments, and merchant partnerships. The order could force the startup to pause operations, rework its model, or apply for the necessary licence before resuming business.

For the broader ecosystem, this episode is yet another reminder that regulatory guardrails in fintech are tightening rapidly. Startups can no longer afford to operate in the “grey zones” of compliance.

Whether Simpl manages to navigate this storm and bounce back—or becomes a cautionary tale in India’s booming fintech story—remains to be seen. But one thing is certain: India’s regulators are making it clear that convenience cannot come at the cost of compliance.