Online wallet, payment firms account for 50% of fintech start-up buyouts in 2016

Tech firms are buying out mobile wallet and online payment start-ups to ramp up their payment infrastructure


PayU’s acquisition of Citrus Payment Solutions Pvt. Ltd in a $130-million deal in September  is the largest deal in online payment sector in terms of value. Photo: Bloomberg
PayU’s acquisition of Citrus Payment Solutions Pvt. Ltd in a $130-million deal in September is the largest deal in online payment sector in terms of value. Photo: Bloomberg

Mumbai: Indian financial technology start-ups saw 12 acquisitions in 2016, according to a report published by the start-up tracker, Tracxn. Six of these were in mobile wallet and online payments segment, which includes PayU Payments Private Ltd’s acquisition of Citrus Payment Solutions Pvt. Ltd in a $130 million deal in September—also the largest deal in this sector in terms of value.

Some of the other buyouts include Amazon India’s acquisition of online payment gateway services Emvantage Payments Pvt. Ltd, Flipkart Ltd’s acquisition of Unified Payment Interface-based payment app PhonePe, Ola’s acquisition of interbank mobile payment platform Qarth and Shopclues’ acquisition of mobile wallet for offline stores Momoe Technologies Pvt. Ltd.

“Companies from the e-commerce and consumer Internet sector are buying out these (online wallet and payment) companies to ramp up their payment infrastructure, in what is seen as an effort to evolve into a complete ecosystem as part of their service offerings,” Tracxn said in a statement.

Flipkart, India’s largest e-commerce firm, has also ventured into fintech through its recent tie-up with Bajaj Finserv Ltd to offer e-commerce purchase loans, said Tracxn, which estimates the Indian retail loan segment would grow at a compound annual growth rate of 18% to reach $830 billion by 2020.

Among the remaining acquisition deals, they were mostly acqui-hirings in the online lending space to improve product offerings and operations. Acqui-hire is when a company acquires another for its employees’ skills.

According to Tracxn, overall funding in fintech has reduced to $512 million across 83 deals in 2016, from a peak of $1.4 billion last year across 80 deals, owing to Paytm Mobile Solutions Pvt. Ltd’s series E round of funding, which accounted for almost 49% of $1.4 billion.

While total funding at the seed stage has year-on-year increased by 12.5% to $27 million, the slowdown in total funding can be attributed to a decline in early and late-stage funding activity.

The report said the average investment ticket size at the series B stage saw a 24% increase at $15.4 million.

Overall in fintech, mobile payment companies and lending companies account for almost 80% of the total funding activity, having raised $212 million and $199 million, so far, respectively.

The most funded companies in fintech include Paytm that has raised $105 million, MobiKwik that has raised $90 million, InCred with $74 million and FINO PayTech Ltd at $38 million funding.

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