Neobanking startup Muvin has ceased its operations following a directive from the Reserve Bank of India (RBI) instructing the discontinuation of Unified Payments Interface (UPI) in co-branding arrangements. The move has left users dismayed, with notifications informing them of the closure of the Muvin card programme and the migration of available balances to the “Issuer Livquik” app. The migration process is slated to conclude by February 1, with users to be duly informed about accessing their balances. Adding to the uncertainty, Muvin’s app is no longer available on the Google Play Store, as reported by Entrackr.
Muvin, co-founded by Vineet Gupta and Mukund Rao, catered to both teens and young adults through its prepaid card and mobile app. Despite securing $3 million in a pre-Series A round led by WaterBridge Ventures in January 2022, the startup encountered insurmountable challenges due to the RBI directive issued in June 2023. This directive mandated prepaid payment instrument (PPI) issuers to discontinue UPI services in co-branding arrangements, affecting Muvin and other platforms like DreamX (Dream11), Fampay, Akudo, and CheqUPI, which lacked PPI licenses.
In response to the regulatory change, Muvin was compelled to shutter its operations. Similarly, Akudo, a teenagers-focused neo-banking platform backed by Y Combinator, also suspended its core UPI and card business in September the previous year. Founded by Lavika Aggarwal, Khanna, and Jagveer Gandhi, Akudo offered a digital bank for teenagers and had raised $4.2 million from investors such as Y Combinator, JAFCO Asia, Incubate Fund India, and AET Fund in September 2021.
The closure of Muvin and Akudo’s UPI services underscores the profound impact of regulatory directives on neobanking platforms operating in India. The evolving regulatory landscape poses challenges for fintech startups navigating the complex regulatory framework, highlighting the importance of regulatory compliance and adaptability in the dynamic fintech ecosystem. As the fintech industry continues to evolve, stakeholders must remain vigilant and responsive to regulatory developments to ensure the sustainability and resilience of the burgeoning fintech ecosystem in India.