Visa likely to invest $250 mn in domestic payment giant Billdesk

Global payments facilitator Visa is likely to invest $250 million into Indian payment gateway Billdesk with the company expected to be valued around $2 billion as per a Times of India report.

Founded by former Arthur Andersen executives MN Srinivasu, Karthik Ganapathy and Ajay Kaushal, the company might yet seek for higher valuation. It is currently backed by the likes of General Atlantic, Clearstate Ventures and Singapore based Temasek Holdings. Billdesk provides the companies the backend infrastructure to accept online payments.

In response to queries about the deal, Visa said, "As a policy, the company doesn't comment on partnerships or investment speculation.”

Billdesk processes around $50 billion worth of payments annually and is growing at around 40 per cent annually. The company gets commissions from banks and merchants to facilitate transactions.

Mumbai based Billdesk is the leading payment gateway in the country had expressed interest in giving exits to some of its Private Equity investors. It was said to be in talks with American Express and Paypal among others in the first quarter of 2018.

In 2016, Billdesk acquired Mumbai based Loyalty Rewardz Management o offer loyalty solutions and has invested over Rs 1 billion in the company.

The online payments market has witnessed tough competition over the past few years with some erstwhile wallet companies like PayU also switching to a larger payments function. Billdesk competes with PayU, CCAvenue and Razorpay among others but has so far had the first mover advantage having started in 2000. In FY17 the company reported Rs 9.5 billion revenue up from Rs 7.9 billion in the year ago and has been profitable since at least 2008.

By 2020, the transactions in Indian fintech sector are expected to cross $73 billion growing at 22 per cent CAGR according to a KPMG report.

Coupled with the push of demonetization, rise of ecommerce  and cheaper availability of data services over the past couple of years, the payments sector has seen many new entrants including the government led initiative of Unified payments interface (UPI).  While Google has already ventured into the payment space with its UPI app Tez, Facebook’s Whatsapp has started offering payment solutions this year.  Even Flipkart and Amazon have been actively pushing their respective payment services to acquire a larger share of the market.