Neobanking Infrastructure in India: BaaS Providers Compared
You can't run a neobank in India without a regulated bank partner, and you don't talk to that partner directly. BaaS (Banking-as-a-Service) providers sit in between, exposing modern APIs over old banking infrastructure. Here's how they compare.
Key takeaways
- The major Indian BaaS providers: Decentro, M2P, Zwitch, RazorpayX, Setu.
- Differences live in: which banking partners they integrate, which products they enable, pricing model, and developer experience.
- Choice matters: switching BaaS providers is a major engineering effort.
- For most neobank use cases, Decentro or M2P are the safe defaults.
Why this matters
The BaaS layer is your bank-product surface area. Get it right and you can launch a debit card, savings account, or expense card in 8 weeks. Get it wrong and you're rebuilding integrations 6 months in when you realize your provider doesn't support what you need.
What BaaS providers enable
- Virtual and physical debit cards
- Savings and current accounts (via partner banks)
- Domestic and cross-border payments
- KYC and onboarding
- Expense management and corporate cards
- Lending integration
The breadth varies. Some specialize in cards, others in current accounts, others in payment flows.
The major players
Decentro
Broad API surface, decent docs, partnerships with Yes Bank and others. Strong for current accounts, payouts, and card issuance. Pricing transparent.
M2P
Largest by transaction volume. Strong card-issuance platform; powers many of India's prepaid and credit card programs. Enterprise-friendly. Pricing negotiated.
Zwitch
Developer-friendly, modern API design. Smaller than Decentro/M2P but improving. Good for startups iterating fast.
RazorpayX
Strong on business banking and payouts; ties tightly to the Razorpay ecosystem. Less suitable for consumer neobanking but excellent for B2B payments.
Setu
Best known for account aggregator + bill payments. Adjacent rather than direct BaaS but worth knowing.
How to choose
What product are you building? Card-led neobank → M2P. Current-account-led → Decentro. Payments-heavy B2B → RazorpayX.
Which bank partner do you want? Each BaaS has a preferred bank or two. Some bank partnerships have customer-facing implications (which brand the user sees on the statement, etc.).
Developer experience. Spend a week with sandbox before committing. Docs quality and API ergonomics vary widely.
Pricing transparency. Decentro and Zwitch publish; M2P negotiates. Get total cost of ownership numbers before signing.
Common pitfalls
Picking on price alone. Switching costs swamp pricing differences.
Underestimating the regulated nature of the partnership. Your BaaS provider's bank partner audits you. Be ready for it.
Multi-BaaS too early. Tempting for resilience, but adds operational complexity that early-stage neobanks can rarely afford.
What we recommend
Pick one BaaS provider. Build a clean abstraction layer in your code so you could swap if needed. Don't actually swap unless forced. Spend the saved engineering on customer-facing differentiation.
FAQs
Do we need a banking partner directly? Indirectly yes (via BaaS); directly only if you're scaling enough to negotiate your own.
Can we self-issue debit cards? No, you need a bank or NBFC partner, mediated by a BaaS provider.
What about RBI license? Pure-play neobanks don't have one yet; you operate via partnerships.