Teenagers-focused neo-banking platform Akudo is shutting down its core UPI and card business, according to three sources aware of the details. The move is a result of Reserve Bank of India (RBI) direction which forbade Unified Payments Interface (UPI) in a co-branding arrangement.
“Akudo is likely to wind up its operations and shut down completely in a few weeks from now,” said one of the sources requesting anonymity. “The company has already stopped onboarding new users and intimated its PPI issuer LivQuik and infra partner M2P Fintech about the shutdown.”
Entrackr has also confirmed that Akudo isn’t onboarding new customers. Several team members tried to sign up on its app despite many attempts.
According to sources, most of Akudo’s business [over 70%] is UPI with around 25% of overall business comes from cards. “Apart from regulatory challenges, the company is also running out of money and its attempts to raise new capital didn’t materialize,” said another source who also wished not to be named.
Queries sent to Akudo’s co-founder Sajal Khanna, M2P and LivQuik didn’t elicit any response. We will update the story in case they respond.
Founded by Lavika Aggarwal, Khanna and Jagveer Gandhi, Akudo is a digital bank for teenagers and provides debit cards which could be controlled by parents. The firm raised $4.2 million led by Y Combinator, JAFCO Asia, Incubate Fund India and AET Fund. Tribe Capital, Cabra Capital and a few angles also participated in the round which was announced in September 2021.
RBI directed PPI issuers to stop UPI in a co-branding arrangement. The direction in June 2023. The move forced Dreamx (Dream11), Fampay, Akudo, Muvin and CheqUPI to discontinue UPI services as they didn’t hold PPI license. Entrackr had exclusively reported about the direction on June 27.
CheqUPI and Fampay, however, somehow managed to keep operating.
Teen-focused neo-banking space is in a very nascent stage at the moment and it will take a few years to reach substantial scale. Fampay is the posterboy of this space and raised about $43 million but it struggled to acquire users and new investment. The company is yet to disclose its FY23 numbers but it collected merely Rs 3 crore and spent around Rs 50 crore in FY22. Junio is another prominent player in the space which raised around $8 million to date.