Amid uncertainty surrounding the regulator’s stand on digital lending via prepaid cards and push back from its banking partner, Uni Cards has deactivated existing card services.
“Due to the latest RBI guidelines on digital lending, we have temporarily suspended card services. This means your card will be inactive for now,” said the company in a customer note, which was accessed by BusinessLine.
“We are working with our banking partners to resume the card services as soon as possible, and will keep you posted. However, there will be no change to your billing and repayments,” said the note.
The move comes after SBM Bank India, the bank partner to a bulk of the prepaid cards in India, reportedly asked these platforms to stop onboarding new customers till there is more clarity with respect to the regulatory norms. In addition to Uni Cards, SBM Bank India is the partner to Slice and LazyPay. The lender has so far refused to comment on the issue.
In June, the RBI barred prepaid payments instruments, including cards and wallets, from extending credit lines to customers, and said that all loan disbursements and repayments must be carried out between the bank accounts of the borrowers and regulated lenders.
Uni Cards today said that while the cards are inactive, customers can still access their ‘Uni Cash’, and that the company has extended the zero-charge limit on Uni Cash till September 21 for them to meet their emergency and everyday cash requirements.
In a separate press statement, Uni Cards said it had taken a call to pause onboardings in light of the RBI guidelines released on June 20.
“With the recent RBI notification around digital lending, we have decided to proactively suspend card services on our products — the Uni Pay 1/3rd Card and the Uni Pay 1/2 Card. This process will begin in phases for our customers starting today and will be concluded by Monday, August 22,” said the company.
Reports suggest that Slice and LazyPay have all stopped issuing new cards since June; however, Slice is still onboarding new customers via the UPI network using free EMIs and fund transfer services.
Uni Cards offers credit lines of up to ₹6,00,000 to customers between the age of 21 and 60 years, who are recognised by a credit bureau. Both a physical and digital card, the Uni Card works across retailers that accept Visa cards. It is currently present in 130 cities across India and had monthly disbursements of around ₹535 crore, as per the latest information.
The company makes its revenues predominantly from interchange, cross-sell revenue, subvention income from merchant partners, interest income when a customer converts transactions into longer tenure EMIs, and late and carry forward fees.
Today, Uni said that it has has “some exciting products” in the pipeline, that will be launched by the end of this month.