Fintech company BharatPe aims to become a bank for small merchants

The firm, which provides technology and digital lending for offline businesses including kiranas, has witnessed $2-billion annualised business transactions for its POS segment in just three months

Suhail Sameer, group president of BharatPe, has been with the fintech company for about four months now. But the company is already seeing rapid growth under his watch, mainly as the Covid-19 pandemic has significantly accelerated digital payments.

The Delhi-based company that provides payment technology and digital lending for offline businesses, including kiranas, is seeing a three-fold growth in transaction value and two-fold growth in volumes amid the pandemic. It has witnessed $2 billion worth of annualised business transactions for its point-of-sale (PoS) segment in just three months. PoS now contributes close to a fourth of its annual transaction value.

BharatPe operates PoS in 10 cities. The plan is to set up this business in at least 40 cities by the end of the financial year. It is expecting the PoS business to hit an annual transaction value of $5 billion by that time. The company is already clocking an annualised transaction value of $8 billion, of which $6 billion is QR code and $2 billion Swipe business.

“The card acceptance business, which was non-existent (until a few months ago), now accounts for 25 per cent of our $8-billion annualised transaction value,” said Sameer in an interview. “This is the fastest growth story for PoS in the industry.”

Suhail Sameer, group president of BharatPe

BharatPe’s customers include kirana stores, small businesses (chains with 4-5 stores), corporate cafeterias and small restaurants. The company has around 35,000 machines in the market. It aims to scale them up to 100,000 machines by the end of the current financial year.

The company, which competes with players like Pine Labs, Paytm and Mswipe, says that it provides a ‘unique value proposition’ to merchants with zero rental and an option for zero transaction charges. It recently launched cash advance loans on the back of PoS transaction data.

“We launched India’s first zero rental and zero transaction fee PoS machine,” said Sameer. “We believe the concept of charging a cost for the machine and then charging monthly rentals on top of that is outdated. We understood that the merchant is not interested in paying monthly rentals.”

An alumnus of the Indian Institute of Managament, Lucknow (IIM-Lucknow) and Delhi College of Engineering, Sameer joined the company four months ago. He and his team are working on building the Swipe business (debit and credit card payment acceptance machine). Besides that, the focus is also on building a revenue model around lending.

The company, which has raised a total funding of $141.5 million from investors, is also planning to venture into secured lending. It is expected to disburse Rs 135 crore in loans this month. It is aiming to disburse Rs 1,000 crore by March next year. “Our lending has scaled up to seven-fold in the past six months,” said Sameer. He is expecting to raise the next funding round in the first quarter of next year.

Sameer said the ultimate vision of the company was to become a preferred bank for small merchants and offer the entire portfolio of banking services. The products that it plans to launch in the next 12-24 months will be in line with this vision.

“Hopefully we would get the non-banking financial company (NBFC) licence,” said Sameer. “We want to move closer to becoming a digital bank.”

Before BharatPe, Sameer launched and scaled the fast-moving consumer goods (FMCG) business for RP-Sanjiv Goenka Group (Too Yumm!, Evita, Dr Vaidya). He set up and managed a consumer VC fund (RPSG Ventures). Earlier, he had led consulting firm McKinsey’s clean-tech practice for South Asia and the Power practice for India. Sameer is also an early-stage investor across consumer tech, fintech and software-as-a-service spaces as a managing partner at OTP Venture Partners.

DIGITAL DRIVE

• Covid-19 pandemic has accelerated digital payments significantly.
• BharatPe is seeing a three-fold growth in transaction value and two-fold volume growth
• It has witnessed annualised business transactions worth $2 billion for its PoS segment in just three months.
• The firm expects its PoS business to hit an annual transaction value of $5 billion by the end of the financial year.
• It aims to increase the number of its PoS machines to 100,000 by the end of the current financial year.
• BharatPe’s customers include kirana stores, small businesses, corporate cafeterias and small restaurants.