MUMBAI/BENGALURU: The Reserve Bank of India (RBI) has directed Simpl, a Bengaluru based buy now pay later (BNPL) platform, to immediately cease its payments operations. The move comes after regulators found that Simpl, which partners with over 26,000 merchants and allows shoppers to defer payments at checkout, was operating a payments system without RBI authorization.
Under the Payment and Settlement Systems Act of 2007, no company can run such a system without explicit approval from the central bank. Simpl’s shutdown highlights RBI’s growing scrutiny of digital credit platforms that offer instant consumer loans with minimal oversight.
BNPL services have surged in popularity in recent years, attracting consumers with instant credit lines and merchants with seamless sales. However, RBI has expressed concerns over unsecured lending, weak monitoring, and inadequate consumer protections. In 2022, the central bank prohibited BNPL firms from topping up prepaid payment instruments with borrowed funds, signaling the regulator’s intent to treat such platforms under the digital-lending framework.
Simpl, operated by One Sigma Technologies, had also faced investigation by the Enforcement Directorate (ED) for allegedly misclassifying its business as IT services to receive automatic FDI approvals. The ED found that Simpl’s actual operations fell under financial services, which require prior government approval.
A Simpl executive defended the platform’s model, stating, “We use our own money against our own collateral, no public money is involved. If a customer defaults, the loss is ours. We do not charge interest; revenue comes from merchant fees and a flat late fee, avoiding any interest spiral for customers.”
This directive sends a strong message that all digital payment and credit platforms, whether card-based or BNPL, must comply with RBI regulations to ensure consumer safety and system integrity.