ZestMoney, the prominent buy now pay later (BNPL) startup, has made the difficult decision to shut down its operations, citing regulatory uncertainty and challenges in implementing a successful turnaround plan. The announcement was made during a town hall meeting on Tuesday, where the company informed its employees about the decision to wind up operations, leading to the unfortunate layoff of 150 employees. ZestMoney will retain a legal and finance team to manage the closure process.
This decision follows several months of leadership changes, with the founders—Lizzie Chapman, Priya Sharma, and Ashish Anantharaman—stepping down, leaving the company in the hands of investors and a new management team. Established in 2016, ZestMoney had achieved a significant customer base of 17 million, facilitating monthly loan disbursals of ₹400 crore. The startup boasted 27 lending partners and collaborated with 10,000 online brands and 75,000 offline stores.
Despite efforts to execute a turnaround plan referred to as ‘ZestMoney 2.0’ or ‘ZeMo 2.0,’ the company faced challenges in successfully implementing the strategy. ZestMoney had committed to providing two months of severance payment and outplacement support to the affected employees.
In the regulatory landscape, the Reserve Bank of India (RBI) had imposed restrictions on non-bank institutions and fintech companies, including certain ‘buy now, pay later’ services, from loading credit lines into prepaid payment instruments like wallets and prepaid cards. In November 2022, there were reports that UPI provider PhonePe was in talks to acquire ZestMoney, but the deal fell through this year due to valuation disagreements. Subsequently, ZestMoney had laid off 100 employees.
The challenges posed by the regulatory environment and difficulties in executing a successful revival plan contributed to ZestMoney’s decision to shut down, marking the conclusion of its journey in the buy now pay later sector. The closure of ZestMoney underscores the impact of regulatory dynamics on fintech operations and serves as a reminder of the evolving landscape in the financial technology sector.