Home >Companies >People >The crisis has pushed card payments to shift to UPI: Ashneer Grover

India’s digital payments economy made a strong comeback during the pandemic as lockdown restrictions and fears of contracting infection forced consumers to look for alternatives to cash transactions. The Unified Payments Interface (UPI) infrastructure recorded an all-time high, clocking 1.34 billion transactions in June.

Within two years, lending and payments startup BharatPe has become one of the top processors of UPI payments in the country, which has well-funded players such as Walmart-backed PhonePe, Paytm, Google, and Facebook-owned WhatsApp.

Covid-19 is not only providing strong tailwinds to the digital payments ecosystem but will also lead to digitizing and improving the underwriting capabilities of digital lenders in the long term, Ashneer Grover, chief executive officer and co-founder of BharatPe, said as part of Mint’s Pivot or Perish series. Edited excerpts from an interview:

How has the coronavirus crisis impacted BharatPe’s business?

The covid-19 crisis was a mixed bag for us in terms of impact, both positive and negative.

In February, BharatPe was executing 1.6 million transactions worth 45 crore daily, and disbursing 1 crore of loans to merchants every day.

By mid-April, while volumes were impacted, the average transaction value on BharatPe doubled, as we started processing almost 400,000 transactions worth 18 crore daily.

The crisis has caused card payments to shift to UPI.

At present, our total transactions are averaging around 1.2 million every day, and we are processing 65 crore in value every day.

On the lending side, the lockdown and moratorium affected our collections by 80% and now we have started collecting 70% of old loans (pre-covid) disbursed to merchant partners.

In terms of products, how are you reinventing and pivoting?

We utilized the covid-19 time to develop newer product lines. At present, we are piloting a closed-loop card system, which merchants can issue to the customers for increasing loyalty.

Next is our point-of-sale offering, BharatSwipe, through which we are waiving off transaction fees on card transactions, and making revenues on deposits, where the merchant receives the due payments after 15 days.

We are also introducing a credit line product where merchants can pay us daily instalments for the amount borrowed.

How are you managing capital considering that the competition is fierce?

If you identify the needs of the merchant ecosystem, you will not have to undertake unnecessary cash spend.

We continued to be focused on the merchant side during the lockdown and were clear that 95% of our revenues will come from lending.

We were an alternative lending company right from day 1; payments is what we do to make our lending practices smarter.

By design, a QR code is a scalable low-cost solution and our burn for the last three quarters remains under $3 million.

Today, we have a capital runway of almost 24 months as a business, and continue to attract non-banking financial company partners on the back of equity raised.

For debt capital, at present, we have five partners and look to scale it to 20 lending partners to reduce the dependency on the limited pool of partners.

We will be in the market again in the next three months and look at a fresh fundraise.

What kind of growth do you foresee in a post-covid world?

We are looking to close the year at a run rate of $5 billion in annual total payment value, and aim to take our loan book to 300 crore by the end of FY21. Also, total merchants on the BharatPe platform will increase from 4 million to 6 million by the end of this fiscal.

We are also working on retailer and channel financing solutions, where distributors can directly give credit to shopkeepers, and BharatPe will help in underwriting the credit.

What are some of the fundamental shifts you have seen due to the covid pandemic?

The pandemic has forced customers to make digital payments, as uncertainty around banknotes leading to the spread of covid-19 remains.

There has been a higher adoption of UPI, and digital payments will see a new benchmark in the coming months.

This means that while there is short-term pain for lenders as collections are slower, increased digital transaction volumes will equip them with more visibility for underwriting loans in the coming months.

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