Teen-Focused Neo-Bank Akudo To Cease Operations Amid Regulatory Challenges
US-based neo-banking platform Akudo, focusing on teenagers, is reportedly closing its core Unified Payments Interface (UPI) and card business in response to a Reserve Bank of India (RBI) directive. The RBI's directive prohibited the use of UPI in co-branding arrangements, leading to Akudo's decision to wind up its operations within the next few weeks.
According to a media report, Akudo has ceased onboarding new users and has informed its Prepaid Payment Instrument (PPI) issuer, LivQuik, and infrastructure partner, M2P Fintech, about the impending shutdown. This decision comes as a result of both regulatory challenges and financial difficulties, including failed attempts to secure additional capital.
The majority of Akudo's business, over 70 per cent, relied on UPI transactions, while card-related activities accounted for approximately 25 per cent of its total revenue. The company, founded by Lavika Aggarwal, Sajal Khanna, and Jagveer Gandhi, provided digital banking services tailored for teenagers, offering debit cards that could be controlled by parents.
Akudo had previously secured USD 4.2 million in funding, with support from investors like Y Combinator, JAFCO Asia, Incubate Fund India, and AET Fund, among others. The RBI's directive impacted various companies that used UPI in co-branding arrangements, requiring them to discontinue their UPI services due to the absence of a PPI license.
