How OKCredit scaled to 5 mn active merchants using free digital ledger app

Bengaluru: Bengaluru-based OKCredit, which provides mobile app for small merchants to keep track of their day-to-day purchases and sales, now has over 5 million active users spread across more than 2,000 cities in India, according to a top company executive.

The startup wants to change how India’s smallest merchants do their daily bookkeeping, from paper-based register notebooks to a more digitized and structured manner using a mobile app. Founded in early 2017, OKCredit targets small merchants like kirana store owners, paan shops, medical stores, and laundry service providers, among others.

Harsh Pokharna, chief executive of OKCredit, classifies them as “micro-merchants” who usually depend on paper formats to keep track of their daily business accounts, traditionally known as a ‘bahi-khata’ or a ledger.

The small merchant’s ledger also includes records of credit transactions or products sold on credit to a merchant’s frequent customer who settles accounts monthly or bi-monthly. However, the process of settling credit payments is painstaking and the merchant could end up losing money if the transaction isn’t recorded with the proper time and date stamps.

This is also where OKCredit steps in to solve the problem using SMS and WhatsApp integration. Every time a credit purchase is made, the merchant sends out a message to his or her frequent customer. The end customer can also view his or her outstanding balance with that particular merchant via a webpage link which also provides a monthly breakdown of credit purchases.

“Small merchants spend a lot of time settling individual accounts with their usual customers and it typically takes time—the same time that the shopkeeper could have spent helping a customer buy products,” said Pokharna in an interview.

According to him, credit transactions (between small merchants and customers) are usually stronger in tier 2 and 3 towns because the customer-merchant relationship is strongest in small towns since frequent customers also provide seasonal revenue to merchants (during festivities, etc). But most of these transactions are still made in cash.

Since the suppliers to small retailers also generally deal in cash, the merchant doesn’t have an incentive to make bulk purchases of stock using digital means. This is also the next pain point that OKCredit is looking to solve by trying to onboard more suppliers to the OKCredit platform.

“As more mobile internet users started coming into India’s Internet for the first time post Jio…it also included small merchants like kirana store owners, shoe sellers, pharmacies, restaurants etc… these are not typical business softwareusers as such, they work mostly with consumer tools like WhatsApp, etc. to communicate not just with family and friends but also to transact with their own customers and suppliers,” said Dev Khare, Partner at Lightspeed India Partners in an interview.

“The ecosystem also has POS companies like Pinelabs, and MSwipe, who are targeting a slightly large SME segment with a hardware play, digital payments vendors like PayTM and PhonePe, and fintech/lending companies who use alternate scoring methods, as well as software companies like OkCredit and Tally…and in the coming years, the market could become any combination of these products, and the low-cost digital acquisition method is the best way to get there,” added Khare.

Currently, the OKCredit mobile app is also available in vernacular languages including Hindi, Tamil, Telugu and the company says it will continue to build in newer languages when the app gets more adoption in new regions. Currently, the largest users of OKCredit are spread across Delhi, Rajasthan, Uttar Pradesh, Bihar, Maharashtra, and Gujarat.

Pokharna also told Mint that there are currently 60 million small merchants in the country who could benefit from free mobile-based solutions like OKCredit. The startup had last raised $15.5 million led by Tiger Global in June along with participation from other investors like Lightspeed India Partners, Venture Highway, and Y Combinator among others.