 "Pramod Saxena, Chairman & Managing Director, Oxigen Services India")
When payment solutions provider Oxigen Services started in July 2004, it was one of the first to launch a digital wallet in India. It later lost its first-mover advantage to Paytm and Freecharge, whose fatter investor cheques, blitzkrieg marketing and service- based app system took over the market. Founder and chairman Pramod Saxena speaks to Karan Chaudharyy on the outlook, explaining why he’s confident on the next level of growth. Edited excerpts:
How has the past year been for you?
We have been recasting ourselves into a retail-driven business that would take on services at retail for walk-in customers, support financial inclusion and make banking reach the last mile. We separated the retail entity and created a new one for online. Apart from mobile wallet, there are a number of other things we do.
Also, we have spent a lot of time in defining the online space. Our core belief is while payment and wallet are important, what is necessary is to create a system where digital payments through wallet primarily or any other digital means can happen.
What are you working on?
We are in the process of creating an environment which would be a backbone for all services accessible online, including e-commerce, government payments and financial inclusion. This platform could be accessed whether or not one is a wallet subscriber.
In China, there is WeChat; one can browse the environment. We’re building a somewhat similar environment, to create and connect with all service providers, who can be accessed by customers on a chat platform, with all functionalities of WhatsApp, Facebook or LinkedIn, including enterprise solutions. It is a unique feature we are developing and wallet would be a payment gateway for services.
We are looking at taking a WeChat-like approach and working with some companies which have the platform and eco-system to support that. We are not reinventing the wheel.
Alipay-Paytm combined; do you think of them as a threat? Do you believe you can take on the competition?
The Indian market is huge. We are talking about almost a trillion dollars worth of transactions. The need for financial inclusion is large and no single entity can meet this requirement. Also, I do not think this government or any system would allow an Alibaba or someone (similar) to come and rule the market. That is not going to happen. So, there is scope for play for a number of players.
I think Alibaba’s approach is different. It has to fight its battle with Amazon. Their main goal is to enter e-commerce and they will be competing there. When it comes to payments, India has not been a country where one or two can do it all. There would be a lot of other players in the fray.
I do not see Alipay or Alibaba as a threat. They’re actually helping, by putting in a lot of money. Even if it has gone down the drain, it has helped in educating the market.
At one point you had the first-mover advantage. You are talking about setting up an eco-system now but Paytm and Freecharge have already done it.
When we started early, we created the physical eco-system of 200,000 access points across the country, which the competition does not have. That is our advantage. The competition is now seeing the need for omni-channel. It is tougher to create a physical connect than it is to do online. While many others have done things more on online, we have a more omni-channel approach.
Where is Oxigen in the pecking order?
If the pecking order is in terms of transactions, we are much ahead of Paytm and Freecharge. We do around
60 million transactions a month. Our gross transaction value was Rs 12,000 crore last year and it is all customer money, not ours. This year, we will do close to Rs 15,000 crore.
In the offline business, we have been profitable for four years. That is why we have separated offline, as online does need more investment. We have done that but not of the order or magnitude the competition has. We believe that while Paytm or Alipay invests an additional billion dollars, we will get cash- positive or break-even in our online business in three years. This is year one.
In offline this year, we have Ebitda (operating earnings) of Rs 33 crore in our other transaction business. Our business approach is to create a solid foundation, supporting business, and not be dependent on investor money alone.
Any fresh round of funding? What is your expansion plan?
We are bringing in two sets of funding, one for offline and the other for online. These are both strategic partners. Our expansions are continuing, we have around 25 million wallets. In fact, in our online business, we have a revenue stream that generates a positive bottom line. This is the reason why in online business we have a negative of $3 million and a positive of $3 billion in other businesses. So, we have not bled cash this year.
