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PhonePe is reportedly in talks to purchase the technology stack of ZestMoney, hire 150 of its employees, and forgo an $18 million loan it had extended to the cash-strapped lender, according to the Economic Times.

The talks come after reports suggested that PhonePe walked out of a deal to acquire ZestMoney following a six-month-long due diligence process that raised red flags.

PhonePe is now said to be looking to strike a commercial agreement with the lending firm instead. In addition, the fintech unicorn will pay $8 million to ZestMoney for a licensing agreement.

The move would allow PhonePe to expedite the launch of its own lending business, as it applies for a non-banking finance company (NBFC) license. It had pitched lending as a key part of its latest fundraising.

ZestMoney has been in talks with its current investors for additional funding as it pivots into a software-as-a-service business aimed at digital lending. However, PayU, which owns around 15% of the company, is unlikely to participate in the round.

The digital lender has changed its business model to offer a white-label solution to other fintech lenders, non-banking financial companies (NBFCs), or banks to process their own credit business.

The move to become a white-label solution provider came after the Reserve Bank of India put forth digital lending guidelines. Fintech lenders must now adhere to strict regulations around the flow of funds and the accounting of loans.

ZestMoney’s platform is compliant with the latest lending guidelines, and other fintech lenders, NBFCs, or banks may be able to speed up their go-to-market and remain compliant by leveraging its tech stack as a credit aggregator.

Founded in 2015 by Lizzie Chapman, Priya Sharma, and Ashish Anantharaman, ZestMoney began as a loan-sourcing platform to enable quick disbursal of credit at the point of sale, mainly focused on online merchants.

The platform has built credit partnerships with multiple lenders such as Aditya Birla Finance, Tata Capital, and Hero Fincorp, and has acquired Nahar Credits, a Chennai-headquartered NBFC, to take a certain share of the loans on its own books. It works with ecommerce majors like Flipkart, Amazon, Myntra, and Nykaa to offer pay-later as a product.

According to The Economic Times, an executive at a rival fintech asserted that moving towards a white-label solution will transform ZestMoney’s business into a much smaller operation that will require a smaller team.

Moving into a software service model means that ZestMoney’s revenue will only come from fees, unlike in credit where interest margins provide a significant revenue opportunity.