With digitalization taking the leading position in driving the foundations, India is in an exciting phase. With the e-commerce industry setting its footing and the digital payment system becoming the key derivative, the last decade had also certainly sparked the traction of the application of digital technologies. However, India’s digital landscape is still in a nascent stage and undergoing many transformations, driven by the policy framework and technology penetration. The digital payment system is the banking sector’s poster boy, changing its dynamics. Digital payment trends are surging expeditiously, with big giants entering the battlefield and offering cash backs, rewards, and offers. To woo customers to use their platforms. The increased smartphone penetration and cheaper internet have helped digital wallet companies greatly, and they have started clutching a place in the customers’ lifestyle.
The companies that want to add clients and the clients who have also started to recognize the benefits of having a digital payment option while making the purchase are not only the companies that want to add clients. The digital payment industry is gaining prominence and is growing exponentially, which is also a good sign for the economy. Many more individuals are opening up to accept this approach along with the conventional one. (1) The behavioral shift became an enforced one. When the demonetization was announced, the entire digital payments trend got more wheels. India is among the top nations with the fifth largest online customer base globally. Most of them use mobile internet only, which is a driving force for digital payment success stories. Furthermore, the rise of new-age technologies such as e-wallets, UPI, tap, and pay has allowed individuals to look beyond the traditional payment mode. The technological transformation that the nation is witnessing has both advantages and disadvantages that are necessary for a better future to be addressed (2).
The digital payment mode has a lower operating cost, which is a positive indicator of the entire industry’s growth. By adopting digital payments, the delay of cheque clearance and payment transfer can be avoided. This saves time and other resources, in turn. The turnaround time of any work is reduced as the instant payment options remove the time barriers. Digital payments and UPI have been instrumental in India’s rise in e-commerce. They will continue to give the e-commerce sector a boost. As digital payments and smartphones continue to grow, online shopping’s rising trend will become even stronger (3).
How have online payments made life easier?
Usually, the payments made through digital modes are problem-free and save time. With no prerequisite for real money, anyone with a mobile phone and a bank account can directly pay the vendor. The transparency in the system becomes obvious when cash trading has reduced. With every transaction being documented and recorded, the scope of suffering loss and other illicit activities is significantly reduced. The emergence of the digital payments industry has provided businesses with a huge opportunity to grow and take the lead. More and more seamless technology is needed, and IT businesses are working rigorously to improve the user experience (4).
Digital payments are influenced by innovation, which is prone to cyber-attacks despite high security. By sending links or creating a dummy app, people with ill intentions find ways to fool people who can not understand and succumb to such attacks. The weak infrastructure and reach of cyber policing also make it easier for such individuals to operate and roam scot-free. Innovation comes with its advantages and disadvantages. To make it more accessible and trustworthy, we can address the challenges and make necessary improvements in the current framework.
Startups are looking at where they can potentially go, more than where India is right now. India was ranked seventh in 2018 by the Bank for International Settlements among the 24 countries where digital payments are tracked. In India that same year, around 67 million payments were processed per day, about one-eighth of China and one-seventh of the US. In just six years, this marked an eight-fold growth. (5) But in terms of financial inclusion, India still has a long distance to cover. It was ranked last in per capita penetration and frequency of use in 2018, the latest year for which BIS data was available, with just 18 digital transactions per person per year.
Many digital payment apps exist in the Indian market. Applications like PayTM, Google pay, PhonePe have been a major contender in the market and are biggies of their own. These apps’ growth cannot be compared to each other as their motive is entirely different once the reports come out. Flipkart runs PhonePe; Google Pay is run by Google (6) PayTM is the only app that grew in India on its own. But, there is one app that crosses the fine line between being Made in India and world-class growth. (7) The payment app is the startup progress of individuals who aim to smoothen the e-pay game even better. BharatPe is the name. BharatPe has seen tremendous growth, and their success is what many admire. With huge fundings to their name, let’s comprehend their journey on fighting the level of the battle against the corporate biggies.
BharatPe is a startup in financial technology that offers merchants a one-stop solution for collecting UPI payments through multiple payment apps in India. Once they sign up for this simple, quick response code, merchants can instantly start receiving payments to their bank accounts instantly through For UPI apps like Freecharge, TrueCaller, Google Pay, Paytm, Mobikwik. So on, BharatPe makes the payment system simple. This utility app is implemented to monitor settlements and transactions, collect UPI QR Code payments, accumulate regular cashback, and control and evaluate sales. In India, BharatPe is aiming to reach one crore plus offline merchants (8).
Some of the benefits that bharatpe offers are almost like a dream. BharatPedoes do not ask for any setup fees or any transaction fees. After the payment has been made from the customer side, the amount immediately gets deposited into the vendor’s bank accounts without any hassle of fees or lag. The setup of a BharatPe account is very easy and affordable, and is so secure. Unlike physical copies of payment cards, BharatPe offers e-cards that do not expire, so you can use the same card for a lifetime unless you want to change it. It offers the fastest payment experience even under server issues; it takes care of any transactions that have failed in the process. Bharat is truly revolutionizing the payment game in India. (9).
The fintech startup, launched in March 2018 by Ashneer Grover and Shashvat Nakrani, offers a product portfolio to help merchants accept digital payments through QR codes that promote the infrastructure for government-backed UPI payments. Throughout the process, BharatPe has also integrated technology – from loan requisition, KYC, and risk calculation, to loan disbursement. It also provides products to address merchants’ other financial needs, such as insurance and bill payments. The startup asserts to have managed to reach more than four million companies with its QR codes as of August 2020. BharatPe had more than two lakh merchants in August 2018, with 5 million merchants on the platform as of now (10).
Bhavik Koladiya is the Group Head of Product and Technology at BharatPe; he says that there were neither investors nor technicians when the team first created the BharatPe app. The team used tools such as IFTTT, Google Sheets, and Twilio and depended solely on the BHIM app’s payments. They only started to believe that the product would work after they began out and added 100 vendors. The startup delivered new features and updates daily in the first year and a half and continuously got merchants’ responses. To offer vendors an easy and seamless experience, the team also updated the app.
BharatPe’s CEO Ashneer Grover knew the real deal of the idea way before it was material in India. In an interview, he said the following: “With the vision of building BharatPe as an end-to-end financial services platform for merchants, we started in 2018. We were among the very few startups focused on helping merchants expand their business. We were the first to create an interoperable QR code for UPI that could allow merchants to accept payments across various wallets. However, it was difficult to convince merchants in the initial days about the value proposition around this” (11).
The company, which provides shopkeepers and merchants with digital payment solutions, entered the lending business around eight months ago and distributed around 140 crore rupees until the lockdown period started in the third week of March. Grover said there was no growth in loans during the lockdown period as only 20 percent of the shop owners under BharatPe’s fold were available. The need for capital investments, such as stockpiling for inventory and rental payments, is expected to grow in the future, he added. BharatPe then announced two additional features, Paisa Bolega and BharatPe Balance, for the merchants on its app.
Shopkeepers would recognize aloud instant confirmation of all payments made through their BharatPe QR with Paisa Bolega without having to touch the phone. This minimizes the merchant’s need to check his phone constantly to see if the money came in, adding that no specialized software will need to be acquired. Through deposits, loans, and daily collections through QR, BharatPe Balance will provide information about the total money available to the shopkeeper. The company saw business per merchant go up substantially during the lockdown, as both customers and shopkeepers prefer contactless QR payments, BharatPe said in a release (12).
Funding a dream
The startup, which supports more than 6 million merchants, said it had dispatched more than fifty thousand PoS machines by November of last year, allowing more than 120 million dollars in monthly transactions. It does not charge, but by lending, it is aiming to make money. Grover said that the lending business of the startup had grown tenfold in 2020. The growth of BharatPe is remarkable, particularly because it wasn’t the first startup to help merchants. Coatue Management led the Series D round of the three-year-old startup. The round also involved six current institutional investors, Ribbit Capital, Insight Partners, Steadview Capital, Beenext, Amplo, and Sequoia Capital, bringing BharatPe’s total increase of 233 million dollars in equity and 35 million dollars in debt. On Thursday, BharatPe said it raised 108 million dollars in a financing round valued at 900 million dollars for the New Delhi-based financial services startup, up from 425 million dollars last year.
In the largest fundraiser for the startup, BharatPe plans to raise 150 to 200 million dollars in equity funding and around 500 million dollars in debt. Ashneer Grover said in an interview that the company aims to raise the first tranche of approximately 100 million dollars in equity by March, adding that the debt will be raised for two years. As part of a C series round led by Coatue Management and Ribbit Capital, the New Delhi-based company last collected nearly 75 million dollars in February 2020. A person aware of the fundraising talks said on condition of anonymity, which would make it India’s seventh fintech unicorn that the coming round could value BharatPe at 1 billion dollars.