NEW DELHI: Leading US-based investment firm Y Combinator-backed Akudo, a teenagers-focused neo-banking platform, is shutting down its core UPI and card business, media report said.
According to Entrackr, citing sources, the decision comes in response to a Reserve Bank of India (RBI) directive that prohibited the use of the Unified Payments Interface (UPI) in a co-branding arrangement.
“Akudo is likely to wind up its operations and shut down completely in a few weeks from now,” a person familiar with the matter was quoted as saying.
“The company has already stopped onboarding new users and intimated its PPI issuer LivQuik and infra partner M2P Fintech about the shutdown,” it added.
According to the report, UPI accounts for the majority of Akudo's business (over 70 per cent), with cards accounting for approximately 25 per cent of total revenue. Aside from regulatory issues, the company is also out of cash, and its attempts to raise new capital have failed.
Akudo, founded by Lavika Aggarwal, Khanna, and Jagveer Gandhi, is a digital bank for teenagers that offers debit cards that can be controlled by parents.
The firm raised $4.2 million led by Y Combinator, JAFCO Asia, Incubate Fund India and AET Fund. Tribe Capital, Cabra Capital, and a few other investors also took part in the round, which was announced in September 2021.
The RBI has directed PPI issuers to halt UPI in co-branding arrangements. Because of this move, companies like Dream11, Fampay, Akudo, Muvin and CheqUPI had to discontinue UPI services as they didn’t hold PPI license.