The age of making payments with ease

Riding on rapidly-growing Internet numbers and online transactions in India, several start-ups have begun providing online and mobile payment solutions. These include payment gateways and online wallet services. Mint profiles four such start-ups that have investor support

ENTERPRISE: Mswipe Technologies Pvt. Ltd

ENTREPRENEUR: Manish Patel

FOUNDED: 2011

LOCATION: Mumbai

EDUCATION: Topiwala National Medical College, MBBS

Patel was never in the technology business. He started a company that helped in the distribution of alcohol, and setting up of wine and beer stores. However, while running his old business he realized that as he expanded to smaller towns and cities, merchants found it difficult to settle payments.

“The problem in such cases was that telephone lines would not work well and there was always power shortage,” said Patel over the phone. In addition to this, opening an account with a particular bank to get access to a card-swiping machine was a tedious process for small merchants. The company launched Mswipe, a mobile point of sale solution. The device is such that it has a card reader which can be attached to any mobile phone’s audio input jack. This device helps phones accept card payments through a mobile app. The company does not need any bank tie-up for the transaction to be completed.

When a user makes a payment, Mswipe directs the payment to an escrow (held by a third party with certain conditions) account, which is finally connected to the Visa and MasterCard payment gateways. The company has tied up with more than 12,000 merchants and sells its solution at ₹ 2,500. Mswipe raised a series A and series B round of funding from Matrix Partners with participation of Axis Bank Ltd. It is looking at raising another round of funding by the end of the current fiscal year.

ENTREPRENEURS: Upasana Taku and Bipin Preet Singh

FOUNDED: 2010

LOCATION: Delhi

EDUCATION: NIT and IIT Delhi

Taku and Singh started MobiKwik.com in 2009, an online prepaid account where a user can store money to pay for mobile recharge, electricity bills and pay on online shopping sites.

However, the founders encountered many technical problems in the process of allowing money to be added to the wallet.

“To solve this problem, we had to come up with a solution that allowed users to make transactions with ease,” said Singh over the phone. The duo started Zaakpay.com with $100,000. The solution provided by the company is such that when a consumer makes an online payment, the payment is processed by Zaakpay.com to a nodal account (settlement account), which is later transferred to the banks. The company provides a payment gateway service and charges 3-5% as commission on the total value of the transaction. This commission varies with the type and value of the transaction.

Zaakpay.com raised $500,000 in funding from Sequoia Capital in 2011. It is looking to raise a series A round of funding by the end of the current fiscal year. The company has tied up with over 1,000 merchants, including firms like OLA, Zomato.com, Healthkart.com and others. “We will be providing our services to Wal-Mart in India by the end of this month,” Singh said.

The way forward for Zaakpay.com would include tying up with new merchants, and developing and strengthening the wallet business. The company processes over 200,000 transactions daily and the average daily transaction value processed is around ₹ 350.

ENTREPRENEUR: Bhaktha Keshavachar

FOUNDED: 2011

LOCATION: Bengaluru

EDUCATION: Master’s in electrical engineering, Arizona State University

About three years ago, Keshavachar realized that it was not just big companies that needed a portable product for payments. Merchants in smaller towns and cities too needed low-cost solutions to accept debit and credit card payments.

“Our product costs only $50 as compared with $300 charged by any other terminal that accepts payments,” said Keshavachar over the phone. His company’s device Ezetap is small enough to fit into a pocket and, when connected to smartphones or tablets, converts them to point-of-sale devices that can read card details and enable payments through a mobile application.

Once the app is launched, the user has to enter the transaction details and then swipe the card over the Ezetap device, which has a card reader and magnetic strip. The app acknowledges the transaction and allows the user to digitally sign, after which the payment is processed. The mobile app is also connected to the Web through the server that monitors back-end operations.

Ezetap Mobile Solutions has sold over 45,000 devices and tied up with five banks in India. It raised two rounds of funding—series A and series B—from Helion Venture Partners, Social+Capital Partnership, Berggruen Holdings and American Express Co. Keshavachar is looking to raise a series C round of funding of $20-50 million by March this year.

The company is also planning to partner with more merchants and some international banks. Its device and services are already used by e-commerce sites such as Amazon.in and BigBasket.com, and firms such as Reliance Mutual Fund. Ezetap devices enable on average, daily transaction value between ₹ 3 crore and ₹ 5 crore.

So, the next time you make a debit or a credit card payment while travelling by an OLA cab, or while accepting a delivery from fashion e-commerce site Myntra, you may want to give Ezetap some credit for making that happen.

ENTREPRENEURS: Jitendra Gupta and Satyen Kothari

FOUNDED: 2011

LOCATION: Mumbai

EDUCATION: CA and Master’s in computer science, Stanford University

Gupta was a former ICICI Bank Ltd executive when he met Kothari to discuss the problems in the online payment services industry. This led them to start Citrus Payment Solutions with an initial investment of $35,000. Kothari had been actively involved in funding, starting and selling companies, and played an instrumental role in bringing the initial funding. The technology solution provided—payment gateway and associated services—by the company is similar to what a BillDesk and CCAvenue provide. Citrus also provides wallet services to allow users to make payments with ease.

In January 2012, Sequoia Capital invested close to $1.8 million in the company. It subsequently pumped in more money, taking its total to $3.4 million. Citrus gets its revenues from its merchant customers as a fixed percentage of the transaction as fee and a payment for using the software suite. Consumers use Citrus for free for all its services.

The company has diversified from payment processing to a range of other services such as analytics that help merchants get an idea about the industry trends and offers a virtual card service like Visa and MasterCard as well as a wallet.

In an emailed response, Kothari said Citrus is looking at registering 300% growth in revenue and users in the next one year. It is looking to raise more funds and launch new services for merchants and new apps for consumers. It has tied up with over 2,500 merchants, 35 banks and reached out to over 10 million users.

EXPERTSPEAK

We will see everything converge towards mobile payments. Whether it’s Apple Pay or mobile wallets or any other form, which only time will tell, there is no doubt that virtually all retail electronic payments will rapidly go to mobile phones and there is a lot of opportunity for growth.

Today, the challenges are going to be in terms of competition, customer acquisition, fragmentation, market share, etc. Additionally, mobile payment companies will have to compete or partner with the incumbents such as banks that are actively and aggressively moving into this sector. Last but not the least, standards in this industry are not defined and, assuming there is no single winner, inter-operability—the ability of different information technology systems and software applications to communicate, exchange data and use the information that has been exchanged—will need to be addressed early for the industry to have the explosive growth commensurate with the opportunity.

There will be a lot of start-ups that are going to enter the space. There are a few already that are seeing good growth, but the opportunity is so big and open that there will definitely be new start-ups and innovations happening.

As we’ve seen in several industries, there is always room for innovation. The Reserve Bank of India has done a good job of systematically streamlining the regulations, and making them more and more conducive to innovation and speed of movement. Over the past couple of years, several regulations ranging from electronic know-your-customer norms to debit card MDR (merchant discount rate) to for-profit business correspondents to removing the distance, have made the market more and more conducive to inclusive banking and electronic payments.

—Sanjay Swamy, managing partner at
AngelPrime, an early stage investment fund