In a significant regulatory intervention, the Reserve Bank of India has directed Simpl, a prominent Bangalore-based fintech startup offering Buy Now Pay Later (BNPL) services, to immediately cease all payment operations. The directive stems from Simpl operating a payment system—including payment, clearing, and settlement functions—without possessing the required Certificate of Authorisation under the Payment and Settlement Systems (PSS) Act, 2007.
Simpl founder and CEO Nitya Sharma in a conversation with Inc42 confirmed the receipt of the RBI notice dated September 25, 2025, stating that the business falls under the payment system category and must stop operating until compliance is achieved. The company is currently engaging with regulators to understand the situation better and awaits clarifications.
Read this: After Myntra, ED Has Filed a Complaint Against Fintech Startup Simpl Over Rs 913.76 Cr FDI Violation
Simpl’s Business Model: Seamless Checkout with Merchant Focus
Established in 2015, Simpl has built its reputation as a checkout utility working with over 26,000 merchants, including major platforms such as Zomato, BigBasket, and Rapido. Simpl enables instant payments with a short-term credit window of up to 15 days without interest, inspired by the traditional ‘Khata’ system used by small retailers in India.
Unlike traditional lenders, it charges merchants a discount fee, similar to card networks, and leverages rich data on consumer spending and repayment. This model has helped it gain over 7 million users and significant market traction, supported by $83 million in funding from investors like Green Visor Capital, DIA Investments, and Valar Ventures.
Regulatory Challenges Amplified by Enforcement Directorate Action
RBI’s suspension of Simpl’s payment activities adds to existing pressure following a July 2025 Enforcement Directorate (ED) complaint alleging violations of Foreign Direct Investment (FDI) norms. The ED complaint accuses Simpl of raising ₹913.75 crore from foreign investors under questionable classifications, declaring itself a tech services firm while operating financial services without prior government clearance.
However, the RBI’s action is independent of the ED complaint. Presently, most BNPL companies in India operate with NBFC licenses or as Lending Service Providers (LSPs) for financial institutions. Simpl’s unique positioning as a payments utility has drawn intense scrutiny, highlighting the thin regulatory line fintech startups often tread.
Tightened RBI Oversight and Future Prospects
This move is part of the Reserve Bank’s broader strategy to tighten oversight over payment aggregators and fintech firms, as outlined in the 2025 Master Directions. These new norms set higher compliance bars on authorization, capital requirements, KYC, escrow management, and digital payment security.
Industry experts indicate that while the fintech sector continues to grow, firms must navigate this evolving regulatory environment carefully to avoid operational disruptions or legal risks. For the fintech, this is a pivotal moment to adapt its business structure, apply for necessary licenses, or ramp up compliance to resume services.
India’s fintech ecosystem will be closely watching the regulatory outcomes of Simpl’s case, as it may set precedents impacting the future of BNPL and related digital credit services.
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