ZestMoney, the buy now pay later (BNPL) startup, is set to shut down its operations amid regulatory uncertainty and unsuccessful attempts to revive its business. The decision was communicated to employees during a town hall meeting on Tuesday, where it was revealed that the company would wind up its operations, leading to the layoff of 150 employees. ZestMoney will retain a legal and finance team to oversee the closure process.
The move comes several months after the founders, Lizzie Chapman, Priya Sharma, and Ashish Anantharaman, stepped down, leaving ZestMoney under the control of investors and a new management team. Established in 2016, ZestMoney boasted a customer base of 17 million, facilitating loan disbursals of ₹400 crore per month. The startup had 27 lending partners and collaborated with 10,000 online brands and 75,000 offline stores.
Despite efforts to implement a turnaround plan known as ‘ZestMoney 2.0’ or ‘ZeMo 2.0,’ the company faced challenges in executing the strategy successfully. ZestMoney had promised to provide two months of severance payment and outplacement support to the affected employees.
Last year, the Reserve Bank of India (RBI) prohibited non-bank institutions and fintech companies, including some ‘buy now, pay later’ services, from loading credit lines into prepaid payment instruments like wallets and prepaid cards. In November 2022, UPI provider PhonePe was reportedly in talks to acquire ZestMoney, but the deal fell through this year due to disagreements on valuation. Following the cancellation of the deal, ZestMoney had laid off 100 employees.
The regulatory landscape and challenges in executing a revival plan contributed to ZestMoney’s decision to shut down, marking the end of its journey in the BNPL sector.
