BNPL startup ZestMoney to shut down (Here's Why)

ZestMoney, a buy now pay later startup, is shutting down due to regulatory uncertainty and a failed attempt at revival.

The founders stepped down, leaving the firm in the hands of investors and new management.

PhonePe called off acquisition talks, leading to the company's decline.

ZestMoney's valuation was last at $450 million.

The turnaround plan, ZestMoney 2.0, did not succeed, resulting in the decision to wind down operations.

The company will let go of the remaining 150 employees, retaining a skeletal legal and finance team for the shutdown process.

Employees have been promised two months of severance payment and outplacement support.

RBI norms issued in June 2022 impacted the buy now pay later sector, restricting credit lines on Prepaid Payment Instruments.

ZestMoney had been seeking a buyer since the failed acquisition by PhonePe.

In September 2022, ZestMoney raised $50 million from Australian BNPL fintech Zip Co as part of a larger Series C fundraise.