Ashneer Grover on the launch of the BharatPe postpe
When Ashneer Grover and Shashvat Nakrani foundedin 2018, the startup was certainly not the first player in payments on the market. The main fintech players such as PhonePe, Paytm, and Google Pay were already operating across India.
But BharatPe did not let this be a stumbling block in his path. FinTech now performs nearly five million transactions every day, with an annualized process value of $ 12 million.
Three years later, the unicorn has now entered the “Buy now, pay later” segment (BNPL) with the launch of postpe. The platform offers credit to customers to “buy now, pay later”. Customers can download the postpe application from Play Store and receive interest free credit of up to Rs 10 lakh.
The team claims that postpe is a one-of-a-kind BNPL product that is not limited to large purchases, but can also be used for micro-purchases. BharatPe aims to facilitate a loan portfolio of $ 300 million on postpe in the first 12 months, for its lending partners.
In a conversation with Your story, Ashneer talks about the company’s BNPL product, its differentiator and its plans for the future.
Edited excerpts from the interview:
Your story (YS): Why did you launch BNPL and how is your product different from others?
Ashneer Grover (AG): We look at BNPL differently. Until now, it has been an urban consumer product, as people copy a Western model. But India is a unique country and you have to build models unique to India.
So far, BNPL has only helped people who don’t need credit to buy iPhones. It does not create value; you have to give people credit to those who need it. Currently, BNPL does not solve an affordability issue. BNPL must be a universal product.
It is a doomed business because the Indian consumer needs choice; the credit required is not just for a phone, some require monthly purchases. People may spend more on a food bill and may need credit for it.
If you buy vegetables from a vendor, how do you pay on credit? QR button on our app, scan the QR code and pay the bill at the end of the month. You have the choice of converting it to EMI or paying in full.
The next phase of growth is credit. The movement of money has become easy, but credit must be readily available. The next big wave will be credit on UPI.
For starters, we already have a loan option for our traders. We already have an idea of the transactions they make, and credit is given for that. In a year, we gave 350,000 loans and disbursed 2,000 crore rupees.
If a trader makes transactions worth Rs 30,000 with us in one day, we give him a loan of Rs 1 lakh. They can pay us back in one year, paying off 1,24,000 rupees, at an interest rate of two percent per month.
You have no ball refund. Every day except Sunday, we deduct Rs 400; in a year, your loan will be paid off. On a monthly basis, we lend Rs 300 crore.
YS: What future for BharatPe?
AG: We are launching our bank and registering our small finance banking license, which is pending with the RBI.
YS: From the QR code to other products, tell us more?
AG: With the base of traders that we have, we also have an investment product. If traders keep the money with us on the app, they can earn 12%. Today, in terms of reach and value, we hold almost 40% of the offline transactions market share.
For a company worth $ 3 billion, we only spent $ 100 million on customer acquisition costs; we spent the least of all unicorns. Globally, no one would have built a business of this magnitude spending less money than us. We made it free for traders because it made sense; the government has made our cost zero.
The interoperable nature of UPI and its entire structure has led us to believe that merchants want their transactions to be done at zero percent commission.
In the first 1.5 years of the QR code launch, it sold on its own due to being free. However, the banks still charged the startup 0.6% for the transaction. That changed in January 2020, when the government was looking to increase digital payments.
The QR code is our top of the funnel; we have over $ 10 million in transactions on our QR code. The other premium product is the Bharat Swipe, our PoS machine. The trader buys it for a lump sum of Rs 5,000 and when a customer makes a transaction on the machine, he is not charged an FDR unlike other machines.
If the consumer slips Rs 10,000, you will see a balance of Rs 10,000 on the app; You will only be charged a one percent commission if you immediately transfer the money to your bank account. If you keep it on the app for 15 days, there is no commission.
We have made card acceptance a zero to one percent business. Before us, it was an expensive offer of 2.5% commission and monthly rent.
We have turned the model around and have over 100,000 devices and merchants. We do transactions worth $ 2.5 million; that’s $ 12-13 million between QR and Swipe.
Traders are no longer willing to pay a commission for a UPI. Merchants are also looking beyond the QR and new things, and providing credit against payment volumes has become an expectation. You need to throw beyond payments.