Payment Cos Buy Into this Space Now

Bengaluru:
What has been the turf of banks, non-banking financial companies (NBFCs), and more recently new-age fin-tech startups, has now caught the fancy of companies like Citrus Pay, Innoviti and PayUMoney, which have hopped on the lending bandwagon to help their existing network of merchants and small business owners swim up the value stream.The micro, small, and medium enterprise (MSME) segment, or the `missing middle’, with a hunger for capital typically rely on the organised lending market for secured or unsecured loans. Payment companies, on the other hand, sit in the middle of every transaction, and are privy to a lot of data on these merchants and their growth metrics. That’s where they are vying for an opportunity.

Innoviti this month took its credit distribution pilot a step further and launched smelending.com, a marketplace for connecting small business buyers, large manufacturers or sellers to these buyers and lenders who are interested in extending credit to such buyers.

Smelending.com disburses loans . 5,000 and up to ` as low as ` . 2 lakh at interest rates ranging from 16% to 18%, and has tied up with one large NBFC as a lender. “We are sourcing borrowers from sellers in our network (wholesaler or dealers), and this brings down lead generation costs and, therefore, loan cost goes down. It opens up an opportunity for small ticket size loans,“ said Ra jeev Agrawal, CEO, Innoviti. The company’s other product, uniPAY has customers including Reliance Retail, Titan Company (including Tanishq) and Landmark Group.

Similarly, Naspers-backed online payment gateway company PayUMoney tied up with digital lending platform Lendingkart and launched Lendingkart Grow, an initiative to provide working capital loans to SMEs.

While Lendingkart gives out the actual loans, which range from . 50,000 to ` ` . 5 lakh, PayUMoney provides the network of merchants making it a symbiotic relationship. “We have 90,000 merchants and we are adding 6,000 new transacting merchants every month,“ said Nitin Gupta, cofounder, PayU India, which launched PayUMoney in April 2013.

And the overarching reason for this trend, according to Ganesh Rengaswamy, MD or Accion’s Frontier Investments Group, is a need to increase margins and build profitable businesses.

Source: The Economic Times

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Author:

Neeraj; an entrepreneur & a visionary in the field of Railway, Defense & Automobiles, is a graduate in commerce and a Harvard Business School Alumni. He’s an expert in govt. liasoning & contracting and has an exceptional network & connections at both local as well as global level. He’s an expert in Market Strategy & Planning and has served number of overseas companies as an advisor/consultant. He takes a profound interest in upcoming startups & is very receptive towards ground-breaking ideas & innovations. He likes to brainstorm those ideas and if the values & philosophies matches; he is even ready to invest his resources, serve as a mentor or act as an incubator to futuristic businesses.

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