Sequoia Capital-backed Prizm Payment Services Ltd plans capital expenditure of Rs 1,000 crore over three years to scale up its network for electronic payment modes like Automated Teller Machine (ATM) and Point of Sale (POS) networks.
Loney Antony, managing director, said the growth in ATM network was fast, while the tempo of POS network expansion remains subdued. The capital expenditure, pegged over Rs 300 crore per year, would be funded through a combination of debt, operating leases and vendor financing. Over a period, internal accrual would increase in financing network expansion and the company would look at another round of capital infusion only in the second half of 2012-13, he said.
Venture capital firm Sequoia invested a little over $15 million ( Rs 68 crore) in the company in two rounds in the past three years. The last capital infusion, of $8 mn, was in the second quarter of 2010-11.
At present, it operates 8,500 ATMs. Of which, 3,000 are on pay-per-use contracts, while the rest work on a fixed fee plus transactions-based charge arrangement. The pace of ATM rollout would improve to 450-500 a month in the next six months from 300 each month being rolled out at present. The number of ATMs installed in India is expected to grow to 2 00,000 in the next four years, he said.
Axis Bank and Corporation Bank are its key customers for the ATM and POS networks, respectively. For expanding presence in the POS segment, it had acquired the POS service business of Reliance Money in 2009. It is now managing about 20,000 POS.
Anthony said there had been a sharp rise in the number of debit cards issued in recent years but the use (amount of payments) at POS terminals remains low, compared to credit cards. Most use debit cards at ATMs. According to Reserve Bank of India data, the issue of debit cards jumped to 237.1 million at the end of March 2011, from 127.7 million at end of March 2009. The payments made by using debit cards rose in these two years to Rs 35,705 crore from Rs 18,547 crore. The credit cards' base grew from 259.6 million to 265.1 million in the two years, while payments rose to Rs 75,516 crore from Rs 65,356 crore, RBI added.