Fintech companies that once built their businesses by operating around traditional financial institutions are increasingly seeking regulatory licences as they look to unlock new revenue streams, improve profitability and deepen customer relationships.
The shift comes as payments and distribution businesses mature, pushing startups to move into higher-margin and more regulated segments such as lending, cross-border payments, wealth management and remittances. Companies including Flipkart, Amazon-backed Axio, Vayana and a growing number of fintech startups have either secured licences or acquired regulated entities to accelerate their expansion plans.
Adjacent Licences
Industry executives say regulatory approvals are no longer viewed merely as compliance requirements but as strategic assets that can help companies build sustainable businesses.
“In the payments space, a license is absolutely essential. One needs to have a Payment Aggregator (PA) license to process payments,” said Reeju Datta, co-founder of Cashfree Payments. “Once you have the payment aggregator-payment gateway (PA-PG) license, it becomes easier to get adjacent licenses like the Payment Aggregator-Cross Border and Prepaid Payments Instruments.”
According to Datta, these adjacent licences can significantly alter a fintech’s business economics. “Cross-border payments is a higher-margin business than domestic payments largely because it is more complicated. Having the necessary licenses helps us leverage this high-margin business, directly impacting our top-line and profitability,” he said.
The ability to operate regulated businesses also enables companies to launch adjacent products and increase customer engagement. Datta said licences have helped Cashfree build offerings across remittances, cross-border investments and travel payments, creating opportunities to both deepen merchant relationships and attract new customer segments.
Early Steps
For newer fintech startups, obtaining licences early is becoming a key part of business strategy. Ankur Choudhary, co-founder and Chief Executive Officer of Belong, said the GIFT City-based wealth platform adopted a “license first” approach from inception.
“In the first year of the company we applied for and received three regulatory licenses from IFSCA,” Choudhary said. “Having our own licences gives us greater control over the customer experience, product innovation and compliance framework.”
Belong currently operates customer wallets for non-resident Indians under its payments licence and allows users to invest in fixed deposits, mutual funds and exchange-traded products through its distribution and broker licences. “Having these licenses helps us launch multiple products, each having its own revenue line, so that we can provide cost-effective solutions to NRIs while still remaining unit economics positive,” Choudhary added.
Building Properly
Executives also argue that compliance investments often create new business opportunities. Datta pointed to Cashfree’s identity verification platform SecureID, which emerged from systems originally developed to meet RBI onboarding requirements.
“What started as a compliance obligation became a standalone business for us,” he said. “The discipline regulation imposes forces you to build things properly, and building things properly tends to create products the market values.”
As fintech firms seek more predictable and diversified sources of revenue, regulatory licences are increasingly becoming central to their long-term growth strategies rather than just a gateway to compliance.