BharatPe forays into P2P lending with ‘12% Club’

Merchant payments and financial services provider, BharatPe, is bolstering its consumer play, foraying into the peer-to-peer (P2P) lending space with the launch of its product -- 12% Club.

BharatPe’s P2P offering will allow individual investors to invest and borrow at 12% interest through the ‘12% Club’ app. For the consumer product, BharatPe has partnered with LenDenClub and is in the process of onboarding Liquiloans.

With the same partners, the fintech had launched P2P lending for its merchants back in 2019.

Earlier this month, fintech startup Cred also forayed into the P2P lending space with the launch of a its product ‘Cred Mint’ for its members. Cred’s P2P product allows its members to earn up to 9% interest by lending to other members and borrow at 12% to 16% through the offering.

However, BharatPe’s solution is a bit different. P2P investors on BharatPe’s platform will be lending to its merchants, as it wants to ensure low delinquencies.

Since these merchants leverage BharatPe’s payment infrastructure, the company will be able to better underwrite these loans, depending on business cash flows and help pay back this credit by even deducting a small portion from daily payouts, the company said.

The borrowing on ‘12% Club’ will be fueled by a standard non-banking finance companies (NBFC) such as Hindon Mercantile to give loans to consumers.

“We did a soft-launch for the product earlier this month and think of ‘12% Club’ as a good alternative to park extra liquidity, without taking the high risks of equity. Further, it allows investors to withdraw from the offering at any time. Since BharatPe has millions of merchants, there is no concentration risk to lending to a small cohort,” said Ashneer Grover, co-founder and managing director, BharatPe, in an interaction with Mint.

According to Grover, the average duration of the loans on the platform are expected to be between three and 12 months. BharatPe’s ‘12% Club’ is already witnessing a monthly investment run rate of $5 million by individual investors, and loan disbursals worth $1 million, Grover added.

While most of the growth has been achieved through referrals, the app is seeing close to 2500 daily downloads, according to the company. BharatPe had first launched its P2P lending offering to employees earlier this year.

The rolling out of P2P lending by Cred and BharatPe marks fintechs trying to roll out newer features to keep captive audiences within the ecosystem, allowing them to earn and borrow at competitive market rates.

“Large fintechs including Cred and BharatPe already have access to cash rich customers and merchants, resulting in low customer acquisition costs. Hence the P2P lending offering is becoming mainstream for larger fintechs,” said Grover.

BharatPe is also looking to launch its ‘Buy Now Pay Later’ (BNPL) product PostPe in the coming month. This will be the third major consumer product for the company, which has historically focussed on merchants.

Earlier in June, the company announced its foray into the consumer space with the acquisition of multi-brand loyalty platform, PAYBACK India. Now BharatPe is looking to bring all its consumer offerings under one app,

“With a single product, customers will be able to save and withdraw money while converting purchases into EMIs,” said Grover.

BharatPe, recently entered India’s coveted unicorn league at a valuation of $2.85 billion, after it raised $370 million in a primary and secondary mix, as a part of a Series E funding round led by new investor New York-based Tiger Global Management.