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Fintech feels RMG burn; Urban Company’s D-Street debut

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Happy Thursday! The new gaming legislation is expected to hurt the business of payment aggregators. This and more in today’s ETtech Morning Dispatch. Also in the letter:■ Groww’s new frontiers■ PayU’s Mindgate deal■ Amazon India cuts lossesRMG ban burns a huge hole in ePay firms’ balance sheets The ban on real-money gaming (RMG) has triggered collateral damage across India’s fintech ecosystem — and payment aggregators (PAs) are among the hardest hit.Driving the news: Payment volumes have already started slipping, but industry insiders told us the real blow will come in the quarters ahead as revenue from gaming clients collapses.For small and mid-sized aggregators, the fallout could gut nearly half their bottom line, sources told us.A senior executive at a newly licensed payments firm estimated some PAs might see a 20% volume dip.Since gaming firms often paid higher commissions, revenue impact could spike to 50%. Tagging issues: Merchant mis-tagging is now under the spotlight, another industry insider told us. Every merchant must be correctly coded under an MCC (merchant category code), which determines transaction fees and compliance. But PAs have been known to misclassify gaming clients, a practice the ban may worsen.Also Read: UPI spends on digital goods drop 26% in August after real-money banCleaning up: Gaming was once a golden goose for payments companies, with the market projected to hit $9 billion by 2029. The ban has erased that upside.“Many smaller payment firms were onboarding gaming companies in the search for quick growth; now that will be gone,” said the executive cited above. For large players like Razorpay and PayU, the ban will help them insulate themselves from competition from upstarts.RBI mandates full KYC for payment aggregators; halts rent payments via credit cards The Reserve Bank of India (RBI) has tightened the screws on PAs, mandating full know-your-client (KYC) for all merchants and halting credit card-based rent payments, a high-margin business line for many.What this means: The central bank’s new directive brings firms like Razorpay, PayU, Cashfree and Easebuzz squarely under regulatory oversight.One sticking point for the industry is the insistence on full KYC, even for merchants with verified bank accounts. The RBI, however, wants aggregators to take direct responsibility and not outsource diligence to banks.By curbing rent payments via cards, the RBI has also cut off a lucrative growth channel, a space where some players had relied heavily on fee income.Offshore gaming firms evade betting law via surrogate ads, social media Even as Indian firms fold, offshore gaming companies are keeping their gambling services alive in India, investigators have found. Officials said several such platforms are pushing promotions through surrogate advertising, covert use of messaging platforms and social media influencers.The Promotion and Regulation of Online Gaming Act, 2025, mandates a blanket ban on online games involving real money, as well as advertising them. Several sports stars and celebrities moved away from such endorsements after the law was tabled before the Parliament.Urban Company ends market debut day 64% higher against IPO price Urban Company made a blockbuster market debut in the public markets today, closing its first day of trade with a 64% gain over its initial public offering (IPO) price of Rs 103.Stock movement:The stock closed at Rs 169 on the NSE and Rs 168.95 on the BSE, representing a 64.1% and 64% surge, respectively.Within minutes of the opening bell, shares rocketed to an intraday high of Rs 179, up 74% from the issue price.Listing gains were equally strong: 57.52% on NSE and 56.3% on BSE.Urban Company’s market cap breached Rs 25,000 crore during the day, up from its Rs 14,790 crore IPO valuation.Also Read: ET Startup Awards 2025: 100X IPO subscription is a responsibility, not a victory lap: Urban Company CEOBuying momentum: Among the buyers was Naspers-owned Prosus NV, which doubled down on its bet by acquiring an additional 4% stake.Investor returns: Urban Company’s listing delivered hefty returns for early and growth-stage investors, with Rs 1,422 crore worth of shares sold in the offer for sale (OFS). Growing list: Urban Company joined a growing list of new-age tech companies in the public markets. Here’s a look at other IPOs and their Day 1 gains. Quicker service, house help bets key to growth: CEO Bhal CEO Abhiraj Singh Bhal said the company’s latest bets—UC Instant (30–60 minute service fulfilment) and InstaHelp (quick access to house help)—are central to its next growth phase.CEO speak: “We have to be meaningfully better on speed of delivery, quality of service, or offer far more value. At least two of these three things have to fall in. We have to work hard and create that value proposition.”Groww keen to shift focus on lending, wealth management (L-R) Harsh Jain, Neeraj Singh, Lalit Keshre, Ishan Bansal, cofounders, GrowwGearing up for its IPO, wealthtech platform Groww is keen to diversify beyond its flagship broking business and double down on credit and wealth management.Fine print: In its updated draft red herring prospectus (DRHP), Groww revealed that broking accounted for 93% of revenue in the April-June quarter, down from 95.6% a year earlier. Meanwhile, income from its non-banking finance company (NBFC) arm, Groww Creditserv Technology, rose to 5.8%, up from 3.5%.The company said in its prospectus that it plans to invest Rs 205 crore from its IPO proceeds into Groww Creditserv Technology.Operating revenue fell 9.6% year-on-year to Rs 904 crore, compared to Rs 1,000 crore a year ago. Profit after tax, however, rose 12% to Rs 378 crore.Backdrop: The IPO plans come amid regulatory headwinds in the broking industry. The clampdown on futures and options (F&O) trading has shaved off around 30% of revenues for major players. Groww hasn’t been immune to the fallout. To de-risk its core business, the company is accelerating lending and wealth management efforts, two verticals it sees as long-term growth drivers.Also Read: Groww eyes affluent investors, wealth management growthOther Top Stories By Our Reporters Anirban Mukherjee, CEO, PayUPayU increases its stake in Mindgate to 70%: Digital payments major PayU has acquired an additional 27% stake in Mindgate Solutions, raising its holding in the Mumbai-based payment processing firm to a majority 70%. The acquisition valued Mindgate at around $300 million, people aware of the development said.Amazon India FY25 financials: Amazon Seller Services, the marketplace entity of Amazon India, has reported a 19% year-on-year increase in revenue from operations to Rs 30,139 crore in FY25, according to documents sourced from the Registrar of Companies (RoC). Its losses narrowed 89% to Rs 374 crore due to its expenses increasing slowly.Autodesk showcases AI-driven tools: San Francisco-based Autodesk said that it plans to invest in building partner capacity and the local ecosystem beyond hiring talent from India. The design-and-make company has plans to expand its regional infrastructure and services, including in India, to improve the performance of its products.Global Picks We Are ReadingNew AI model predicts susceptibility to over 1,000 diseases (FT)The cold truth about EVs: Freezing weather slashes battery mileage (Rest of World)Who is the iPhone Air really for? (The Verge)

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