Raman Khanduja, co-founder and CEO of Mintoak, described the rapid pace of digital payments in India over a short period of time. He thinks banks are in the best position to ride the new wave of industry growth with their “unmatched brand, trust and distribution”. What they lack is the lack of agile technology to solve the whole problem and this is where players like Mintoak can complement the strengths of the former with an agile and agile technology platform to create seamless offerings. and meaningful for SMEs, he said.
Mintoak is a digital payment platform for SME merchants and powers the merchant [payment/ engagement] banking platform.
Digital payments in India have seen a steep growth curve in recent years. What future for growth in 2021-2022?
I would reduce my answer to 3 key elements to explain this phenomenon: Opportunity, adoption of technology and innovative policies.
Digital payments penetration in India is less than 20% and a population of over 1.4 billion compared to developed economies like the United States with over 60% digital payment penetration and pollution below quarter of the Indian population. So if you are an investor looking to invest in digital payments, where would you invest for a bigger upside? India is considered to be the greatest money-moving opportunity available in the world and this is precisely the reason why VCs are doubling in this geography.
Previously, the opportunity to digitize payments largely depended on infrastructure. Banks were to issue physical cards that would be accepted by swiping over a physical point-of-sale terminal. With infrastructure being expensive, growth has been largely driven by developed markets and therefore the high penetration that we are seeing in the US, UK, Canada and elsewhere.
Today in India 80% of the population is in a bank and all you need to make a digital payment is to scan a static QR code from your personal smartphone with the internet. No card, no PoS machine and so the cost element is gone. India has nearly 700 million Internet users who largely access the Internet via their mobile. The Internet population in India more than double the total population of the United States. So where is the greatest room for maneuver for the growing developed economies or for India?
Finally, an important ingredient is innovative policies. In recent years, the government and regulator have engaged with industry to announce commercially favorable measures for traders and have created programs to sponsor infra investments in space.
What was the result of the three factors you listed?
India is one of the top destinations for VC money on digital payments. Considering the size of the pie, all the big tech companies, from FB to Google to Amazon, are in the payments space in search of dominance. And the proof of the pudding is in the numbers.
Credit and debit cards in India have been around for over three decades and we do around 500 million transactions every month. By comparison, UPI, which scans a QR in a store from the customer’s phone to pay from the customer’s bank account, a product launched 3 years ago, already records over 1.5 billion payments (merchant payments). ) every month, with tremendous growth. .
Today on UPI I can transfer money in real time to any Indian just by knowing their phone number. Real-time money transfer to the United States is expected to be implemented in 2023. In fact, UPI has become such a phenomenon that Sundar Pichai, CEO of Alphabet, even recommended that the United States adopt the same. model. Isn’t that amazing and awesome!
What is the idea behind starting Mintoak and how do you differentiate yourself from other players in the industry?
The payments space in India has been extremely noisy over the past decade. From Prime Minister to VCs to fintechs, everyone seems to be talking about digital payments. However, penetration remains well behind expectations and one of the main reasons is that retailers have not embraced digital like consumers have. Digital payments seem to have complicated the life of the merchant instead of solving. Let me add a bit of context.
Today, the cash register of a merchant is crowded and life complicated! It is quite common to see more than 2 QR at a time suggesting so many apps on the merchant’s phone. And then the merchant must also manage cash and khata transactions and somewhat larger merchants have PoS terminals for card transactions. 5-6 payment methods surely create logistical and reconciliation challenges. Not to mention that their primary responsibility is not to manage payments, but to run their business.
On the other side, we have the payment providers scrambling for relevance from the merchant up to. And while the payments are largely free, these providers hope to gain reasonable data over time and use it to extend credit and create a sustainable business model. However, when the business and therefore the data is distributed among several actors, no one is likely to obtain data complete enough to allow meaningful loans. Suddenly, we have merchants indifferent to payments and service providers struggling for relevance!
Mintoak’s purpose is the need to acquire traders (small and medium), which is no longer a problem of supply and demand; it’s an infrastructure problem.
Mintoak consolidates all payments (cards, QR, remote control, khata and cash) on a single platform to offer an omnichannel experience. While payments are the starting point, the same platform provides professional-grade tools for small businesses to run the business more effectively. The platform helps merchants understand a new customer from a loyal customer – this feedback is an integral part of the transaction and also allows merchants to communicate with customers in real time for product promotions and marketing campaigns.
The other difference is in the way Mintoak contacts and serves merchants. It is a platform designed for merchants, powered by banks, where Mintoak, as an integrated fintech, provides seamless access to financial services for SMEs on the payment platform it -same. Banks are best placed to consolidate financial services, including payments for an SME that relies on the trust factor. However, they lack nimble and agile technology platforms, resulting in trader fragmentation. Mintoak addresses this gap by offering its omnichannel platform through banks, complementing a bank’s brand, trust and distribution with a competitive technology platform and making life easier for the merchant.
What is PAAS and how does it help banks and businesses?
Mckinsey’s 2020 Global Payments Report defines Payments as a Service (PaaS) as follows: “While outsourcing the entire payment stack is a possibility, a new generation of technology providers has emerged, enabling banks to rapidly expand and modernize their payment product portfolio without incurring high fees. initial investment. Payments as a Service (PaaS) players leverage state-of-the-art cloud-based platforms to deliver specialized services, such as card issuance, payment clearing, cross-border payments, disbursements and gateways of electronic commerce ”.
The new generation of fintech players complement the confidence of banks with their agile technological platforms to make them intelligent. Providing a platform as a service (PaaS), such models create profitable integrated offerings that directly link the success of fintechs to the growth of banks’ businesses. The approach leverages the bank’s brand, products and distribution with a seamless user experience designed by fintech to create a complete solution for the consumer, including SMBs.
How does Mintoak plan to acquire 1 million merchants by March 2022?
Mintoak is a digital payment platform designed for merchants and distributed by banks. Merchant payments for banks have historically opened the door to the SME segment. However, the infrastructure-intensive nature of the business (expensive point-of-sale terminals) has hampered greater ambition and restricted scaling to smaller segments. Some of the recent developments in the ecosystem, such as UPI and QR payments, coupled with the increasing penetration of smartphones and the internet, have created infra-light models to access even the smallest businesses.
Mintoak has created a comprehensive omnichannel payments platform that enables merchants to do more than just payments and at the same time enables banks to treat merchants (across the spectrum) as customers and engage them more effectively. Currently, Mintoak is working with some of India’s largest banks as an integrated fintech seamlessly feeding merchant payments and access to financial services on the same platform. Banks have a clear roadmap for using Mintoak’s agile technology platform to access not only traditional merchants, but also smaller ones that previously were not a viable proposition.
What lies ahead for the Indian payments industry and how would Mintoak make a difference?
The payments industry in India is setting benchmarks for the world as a whole. The world is watching and emulating what India has achieved in the area of payments over the past 5 years. Just look at merchant payments for example. According to RBI data, we now have over 100 million acceptance points (not unique merchants but acceptance points). Five years ago, that number was less than 2 million. In August 2021, the country recorded 1.6 billion UPI transactions at merchants. The same number was zero just five years ago.
The rapid pace of growth does not have many parallels on a global scale. And digital payments still represent less than 20% of our consumption. This unique combination of a big lead coupled with an improved technological landscape (cloud, smartphone and internet) and a favorable regulatory regime clearly suggests that similar growth will also continue in the medium and long term.
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Posted on: Saturday September 25, 2021, 4:57 PM IST