Modern banking tech company Zeta has closed all Fusion programs for fintech companies under Ratnakar Bank Limited (RBL), according to three sources aware of the details of the development.
“Zeta had communicated to all partners about closure of the Fusion Program with RBL at the end of 2022,” said one of the sources requesting anonymity. “At the moment, only Fampay has been operational on Fusion stack. But this will also be discontinued.”
According to its website, Zeta’s Fusion Suite used to enable fintech companies to embed financial products for wallet, neobanking, payroll, gifting, lending, disbursements, pocket money, refunds, rebates, expense management among others.
While the exact number of Zeta’s Fusion program couldn’t be ascertained, its Indian customers included KreditBee, PostPe, Fampay, Junio and Walrus. During the second half of 2022, Junio migrated to M2P (infra partner) and Transcorp (banking partner).
BharatPe’s Postpe and Kreditbee were the biggest players on Zeta Fusion but the Reserve Bank of India (RBI) stopped players from lending on Prepaid cards. “This impacted other well funded players such as Slice cards where business has dropped 85% since then. This was the primary reason why Zeta decided to wind down Fusion,” said the person quoted above.
In response to Entrackr’s queries, Zeta declined to comment on specific questions “due to client confidentiality” adding that some of Entrackr’s “assertions are incorrect.” The spokesperson further added, “Zeta is and has always been strongly committed to our clients and to ensuring their success. In certain cases, there have been changes to our ability to provide our solutions to our clients driven by regulatory and other market-driven considerations for some specific products or business lines.”
Besides RBL, the company is also scrapping its Fusion program with IDFC Bank, said sources. “This move impacting Fampay which has been powered by IDFC,” said the second source who also wished not to be named as discussions are private. For a while, Fampay has been working with Triotech which holds a PPI license and the company has been migrating all its users to Triotech. As on 31st March 2022, 100% equity of Triotech is owned by Pehe Private Limited which is owned by Fampay’s co-founders Sambhav Jain and Kush Taneja, as per the regulatory filings with the RoC.
In October 2022, Pehe passed a special resolution to invest a sum of Rs 52 crore towards purchase of 100% equity shares of Triotech Solutions Pvt Ltd. Importantly, Pehe raised Rs 52 crore debt from Anicut Capital during September 2021. It looks like the company used proceeds to acquire Triotech.
According to sources, IDFC will discontinue its banking services to Fampay in coming months. Fampay’s co-founder and chief executive Jain, in response to Entrackr’s queries, said that changes in partnerships will not have any impact on continuation of its services — but per Entrackr’s research, Fampay’s app stopped onboarding new users from yesterday.
Queries sent to IDFC didn’t elicit any response. We’ll update the post in case they do.
The shutdown of Zeta Fusion program and scrapping of its partnership with IDFC will have serious financial repercussions for Fampay. The company claims to have 10 million active customers but hasn’t disclosed the number of cards issued.
Fampay will have to reissue all active cards as they will become inactive once IDFC stops its services, said sources. “The reissuance of cards is going to come at a cost as it has to complete re KYC and issue new physical cards.” Jain, however, disagreed and told Entrackr there would be no significant financial repercussions in migration.