With financial technology improving, new products or innovations hit the market at frequent intervals. A lot of this has to do with the evolution of the e-commerce space, and soon you will be able to pay and buy through WhatsApp, Instagram, Twitter and Facebook, says Amrish Rau, managing director, Citrus Payment Solutions Pvt. Ltd. In the past one year, Citrus has moved from having 40 employees to 250 now. It has also made its first acquisition and plans to expand its product basket. Citrus’ founders Jitendra Gupta and Satyen Kothari, and the company’s managing director Rau spoke to Mint about the fast-evolving digital money space, acquisitions, tie-ups and what all these mean to its customers. Edited excerpts:
In the digital payments ecosystem, where does your company stand?
Satyen Kothari: We are only focusing on digital money and want to make it accessible to everyone. Digital money can be wallets, cards or Net banking—we are not religious about it. India is going to move from 1% digital to hopefully 20% digital and we want to be a part of it—whether you are buying an airline ticket, taking a taxi ride, buying insurance, paying bills or sending money to friend.
Amrish Rau: Before 2010, every e-commerce site believed in an inventory-led model. In 2010, e-commerce moved to a marketplace model. Today, e-commerce is becoming hyperlocal. Consumers want everything immediately and hyperlocal promises to consolidate nearby kirana shops and sell immediately. In the future, we envisage a consumer to also be a merchant. The future of commerce is going to become consumer-to-consumer and payments are going to differ in this evolution. Hence, as commerce changes, payment requirements change. Wallet is just one stop in this evolution.
If you are not putting up broad checkout payment gateways on the Web, mobility-based payments, in-app payments, wallets, consumer credit on the go, and payments on social channels together, you are not making a true payments company.
How is your basket of offerings different for consumers?
Kothari: Let’s categorize our services into three—fat wallet, payment processing and apps. The word ‘wallet’ has been hijacked now. ‘Fat wallet’ is a term commonly used in the US for services that hold a consumer’s information such as identity, credit, debit, prepaid card or Net banking information. Payment processing will vary depending on the merchant as well as customer.
Jitendra Gupta: Fat wallet saves all information effectively—consumer identity, credit, debit and prepaid card details and money. We will soon broaden the fat wallet by adding merchant specific discount coupons or loyalty points. Fat wallet is consumer’s digital identity that can be used across networks for fast check-outs. If you look at Paytm and Mobikwick wallets, these only store money; they force the consumer to load money and then transact.
Kothari: They don’t allow you to store card details. The identity part in this fat wallet comes as a byproduct. Your email, phone number and phone device are now your identity. Next is payment gateway. It is the core part where somebody does ground work to make sure the checkout experience goes well, based on communication with the bank, merchant and us. In the payment processing space, we have a lot of competition.
Gupta: Our payment gateway process is similar to, say, what an ICICI Bank-Firstdata does, but with some addition. On top of payment processing, we provide check out experience. For instance, if a transaction fails, our algorithm kicks in and we handle the transaction automatically without impacting the customer experience.
Rau: We offer customised solutions. For instance, for a customer of (online classifieds portal) Quikr, we use an escrow account where we hold the money with us till the customer gets her goods. For a TinyOwl (food app) customer, we offer one-click checkout if there’s money in the wallet.
Kothari: Coming to apps, the Citrus Cube app has four features. Bill payment, recharge, person to person money transfer—which is being integrated, and where you want to pay money to friends—and crowdfunding microfinance. It also lets you set reminders, combined with payment and tracking vehicles. We want to offer full scale money management, which is effectively what your bank is supposed to do but doesn’t do very well. We want to effectively become a banking service in the modern context.
For bill payments, we have tie-ups with all telecom service providers, and for microfinance we have a tie-up with Milaap (crowdfunding platform). The person-to-person money transfer allows you to send money to anyone your contact list, and is similar to Chillr, a person to person money transfer and recharge app.
What is the revenue model? Are these still free for customers?
Rau: We don’t charge anything from the consumer for any of the services we provide. Merchant partners, bank partners or billers pay. Whatever be the transaction channel, the fee will be similar to the interchange fee, which is 0.5-2% of the amount (this cost is borne by the merchant). For this financial year, we are targeting 180-400 crore and we expect to grow at least 300% year-on-year for the next three years.
What safety measures are used in digital money?
Rau: India is one of the safest countries when it comes to digital transactions, providing a big boost to how consumers adopt to it. For instance, the use of second factor authentication. We follow world class processes when it comes to security services that work at an engineering, code and hardware level. We also work at a tokenization level—we send tokens to the device and only when tokens are recognized you can get to the next level.
We have a 20-people team that does nothing but look into protecting consumers and merchants, keeping frauds out, managing risk and improving algorithms to deliver a safer experience.
Kothari: Wherever there is money, fraud is bound to exist. We worry about these things all day since it is our job to worry. We will keep improving the technology. We watch for signs all the time.
Gupta: We have automated in-house engine built to contain these frauds or detect them real time. We use a fraud protection engine called ReD, one of the top risk engines globally, to detect fraud real time and stop at the origination point. To identify the right user, we look at email, phone, shipping address and device identification. We effectively want to reconfirm the device.
What can we expect next from the Citrus basket of products?
Rua: Before the end of this year, we are ready to launch an unsecured credit product. If a customer has transacted with us, we know her behaviour, identity and have a credit score for her. If she comes on the Internet and doesn’t have credit card or Net banking, or doesn’t want to use it, and we know her, we will give her unsecured credit. We can identify the customer based on algorithm and know her repaying capacity. We will allow customers to do quick transactions and pay us later.
Based on data analytics and underwriting capability, we are going to deliver it from about 30 merchants in the first phase this year, and expand to 1,000 merchants in 2016. The credit amount will vary across consumers and it is not an instalment-on-your-credit kind of product.
We are also going to release capabilities for businesses to not just promote and market their products on social channels but also allow their consumers to make payments. We will soon allow you to market and make payments through a single interface. Soon, you will be able to pay and buy through WhatsApp, Twitter and Facebook.
What is your relationship with the existing commercial banks?
Gupta: Ultimately, the money resides in the consumer’s bank account. From the payments processing side, we connect to each bank’s core banking system and connect to Visa or MasterCard.
Rau: We have partnerships with 10 public sector banks and five private and foreign banks, which use our services for their digital payment requirements.
Gupta: While we co-work on the payment processing side, we co-work and compete on the consumer service side. There are some banks that want to co-brand the Citrus Cube app and launch for them and for their customers. On the wallet side, banks want to partner for promotions.
What is your view on banking apps?
Kothari: Banks have to cater to their customers and have a core banking app where a customer can book fixed deposit, check account balance and so on. They have a legacy in terms of regulations, infrastructure and customers, which they can’t abandon. So, banks are trying multiple apps and confusing the market. For banks, banking comes first. So, if a bank launches an app, a customer will think that I am not the bank’s customer and will not use it. Hence, the entry of neutral apps. For instance, Wynk by Airtel works independently. But the first thing that hits a customer’s mind is if I am not an Airtel customer, I can’t use it. It is hard to fight that mindset.
You had applied for a payments bank licence, but did not get one. Are you disappointed? Will you partner with those that have got the licences?
Rau: People with deep pockets and who could be a systemic risk have been given payments bank licences. It had nothing to do with the march of technology, innovations, or digital India. Indian consumers are ready for innovative payment solutions. We felt this was a missed opportunity for the Reserve Bank of India to really drive into digital payments.
A payments (bank) licence would have given us additional ability to access ATM (automated teller machine) networks. We are not going to partner with the payments bank licensees as we don’t see the rationale there.
Kothari: But given that the people who have got the licences have absolutely no background in payments, there is a possibility of collaboration to use our distribution network and technology. Since many of the providers are actually starting from scratch, they are going to look for providers, partners, system integrators and so on.
Rau: How does a Dilip Shanghvi (managing director, Sun Pharmaceutical Industries) get a payments bank licence if it is not about money?
Indian regulatory has taken to drive digital payments, like second factor authentication. Payments bank licence was an opportunity not just to be in a status quo environment but to leap-frog by bringing in competition and financial services disruption. We feel it was a missed opportunity. Will that get corrected in the next 12 months? We would love to see that happen.
You also have offline tie-ups with select merchants, and have recently acquired Zwitch, an online platform. What will customers get from these developments?
Gupta: We are realising that prepaid wallets need to have universal acceptance rather than just for online purchase because that is still limited to 5% in India; 95% of shopping still happens offline. We want to provide acceptance in the 95% of the spends too. Our idea is to make wallets completely universal. We have tied up with Woohoo Gift Cards, Epaisa, PineLabs, Ezetap, Mosambee and Capillary. Through these tie-ups, we are allowing customers to use prepaid wallets to pay for offline transactions. They control thousands of offline stores. We have enabled more than 10,000 already. We also have a direct tie-up with Cafe Coffee Day. Right now, there are 1 million retailers that accept our wallet. We are looking at further offline tie-up.
Rau: The Zwitch team will closely work with us on social marketing and a social payment product that we plan to launch soon.