‘We will be more active in fintech ecosystem’
Payu, by acquiring Billdesk, has become the largest digital payments (B2B segment) player in India.
ANIRBAN MUKHERJEE, Payu India head, says this acquisition will give the company scale and accelerate innovation. In an interview with Shivani Shinde, Mukherjee talks about the growing Indian payments ecosystem, Payu’s ambitions in India, and the road ahead. Edited excerpts.
How did the Billdesk acquisition happen? The company was looking for a partner for long?
We approached them (the founders) a few months ago and they were not in the market for a sell-off. But they were thinking of either going the IPO way or looking at the next step of raising funds and that is the time we approached them.
What will the playbook look like for the Payubilldesk combined company?
First is to close the deal, which needs regulatory approval. Once we close it, we will sit with the founders and get the details worked out. But we do know where some of the synergies are. For instance, they are strong in bill payments in government and financial services, we are much more focused on ecommerce and small and medium enterprises. There are synergies where their products apply to our customers and vice-versa. Like Lazypay can go into their checkout pages. The bigger conversation will happen once we close this deal. I feel this type of scale can drive a different level of innovation and access to the market. We have a lot of complementary strengths and I am hoping that we will have lots of ideas on taking this to drive digitisation of the last mile much faster in India.
When you say “innovate together”, can you elaborate?
One, within payments this creates a leader that has a leadership position across all the major segments of the markets. As a result, we can combine offers and grow faster. Within payments you should expect us to do better products and faster acquisition of smaller merchants.
Two, our India story has three focus areas. We want to be a leader in the digital payments segment and try to be key player in digital credit, where we have launched Lazypay and we will accelerate on that road map; and third is the fintech ecosystem, where we want to drive more investment and work with entrepreneurs.
Fisdom and Indiagold are some examples of the investments we have made. There will be more such examples in the future. They can use our platform to take their products to our customers and they can sell independently.
With the account aggregator (AA) system going live, what will be Payu’s strategy?
In AA consumers and merchants can take their data and use it to get the best loans. It is a starting step of open banking. We are still evaluating what our play in it will be. We will certainly be a user but should we be doing
Big tech players such as Google, Facebook, and Whatsapp are also in payments. Do you see them more active in the financial services sector?
Financial services will play out with consumers and merchants getting financial services from any channel they choose, and whoever creates a great experience will get their trust. From the traditional banking players, while they will be relevant in many parts, digital will be relevant. You will also have embedded platforms and you will have many who would want to use platforms like Googlepay or similar such things. It will eventually lead to a larger, complex and rich ecosystem. And frankly that is what is needed, because financial services in India still have miles to go as we aim to be a $5 trillion economy.
I also think transactions will digitise more but the advice is something you want to turn to a human, especially when it comes to managing money and that is where banks and their branches play a much bigger role. But what will also happen is we will enter the era of contextual banking. There is enough room for everyone to grow. The RBI says payments will have 10x growth from here, credit is a half-atrillion opportunity, and it will only get bigger.
What are the plans of expanding your credit offers?
We are just about launching our SME lending offer. We have merchant cash advances, which is an early settlement offers. We give them the money a day or two before it is due. But our credit offer will now get serious and bigger. We want to build a platform that can be used by others as well.
Will Payu continue to look at more acquisitions?
Yes, we have acquired but we have grown organically as well. In the past two and a half years, our process volume has more than tripled. When travel comes back, we will be 4x of what we were two years ago. On payments we want to work with Billdesk. On credit also after Paysense we want to focus on organic growth. The fintech ecosystem will be a space where you will see us much more active.