Merchant commerce platform Pine Labs on Thursday announced the acquisition of Bengaluru-based API fintech startup Setu in a deal valued at USD 70-75 million.

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The deal will entail a mix of cash and equity.

Setu also tweeted about the development on its official twitter handle.

Commenting on the acquisition, B Amrish Rau, CEO of Pine Labs, said: "Setu will make an incredible addition to the Pine Labs platform...Embedded financial services and open banking are going to be the way forward and the embedded finance market value is expected to exceed USD 138 billion by 2026 as APIs are intensifying the competitive fintech landscape."

The deal is valued at 70-75 million US dollars, company officials said at a virtual briefing.

Setu has seen strong demand for its products - their APIs are used across diverse industry verticals including startups, retail enterprises, banks, insurance, and lending companies.

Setu's existing and emerging use cases cut across multiple digital ecosystems, from Aadhaar eSign to BBPS bill payment, payment collection integration via WhatsApp, FASTag payment collection amongst others.

Application programming interface or API acts as a link between computers or between computer programmes. In other words, it is a kind of software interface, offering a service to other software elements.

Setu is the third acquisition announced by Pine Labs this year.

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"Setu helps their customers, merchants, and brands build beautiful experiences, so consumers can engage with payments and financial services on their terms. We are in the golden phase of digitisation in India, and Setu is a pioneer in supporting innovation on the India stack ? their work on UPI and in the account aggregator space is moving the industry forward," Rau said.

Setu - which has 90-100 employees - will retain its brand identity, business and team, post the buyout.

"We are excited with this investment coming from Pine Labs. Pine Labs' network of merchants and issuers coupled with our API integration prowess will help achieve great results in personal finance management, monitoring loans to predict default rates, credit underwriting, and several other areas," Sahil Kini, Co-founder and CEO at Setu said.

Setu works with account aggregator partners which are non-banking financial companies operating under the 'NBFC-AA' license from the Reserve Bank of India. They enable the consolidation of all financial data of users at a single location and allows users to access services quickly.