Merchants focussed fintech BharatPe is working on a number of initiatives, including consumer lending and a small finance bank. In an interaction with BusinessLine, Suhail Sameer, CEO, BharatPe, spoke of the company’s plans, including more product launches and roll-out of small finance bank (SFB). Excerpts:
BharatPe has raised a significant amount of funds in the recent past. How do you plan to deploy them?
The debt is only for lending. The plan is to increase our lending book from $150 million to $750 million over the next two years. On the equity side, part of the funds will be used for bank capitalisation. A small part will go for launching consumer products but the bulk of it will be used to expand the merchant network and products to deliver on the merchant side. The aim is to triple our merchant network over the next two years and launch more products such as secured lending with gold loans, auto loans. We also want to expand Payback, which we recently acquired, and enable redemption of points at merchant outlets. Some of the funds will also remain with us.
BharatPe is also launching initiatives like the 12 per cent Club. How do these fit in with your focus on merchant payments?
The merchant business will always remain our core. We realised that of the 15 crore transactions per month by our merchants, there are consumers at the other end of the transaction. We have also acquired Payback, which has a huge base of consumers. Opening up of consumer credit helps us increase our lending business and also helps merchants grow their business. That is the core premise of launching the consumer lending product. The 12 per cent Club is a very successful product on the merchant side.
How do you see your book growing between the merchant and consumer businesses?
For the foreseeable future, merchant lending will be a much bigger book than consumer lending. The next six months is all about getting the consumer product right. We will be happy if we get 1 million users by the end of December on the consumer side.
How do these plans fit with the proposed small finance bank?
We want to launch a digital-first SFB across SME and retail consumers. A lot of the float income or float we have as merchants money with us will go into the bank. We will also enable bank account opening on the merchant and consumer ecosystem, which will help the bank and enable us to give better and bigger loans as we see more of the cash flow. The consumer and merchant app become the front end for all the lending products. The second part of the bank is that we want to build a series of shareable APIs. The first branch of the SFB opens in October, it is almost ready. Sometime later this month will submit the final plan to the Reserve Bank of India.
What other new initiatives is BharatPe planning?
On the consumer side, we will launch three products this year. One is the 12 per cent Club. Second is the Buy Now Pay Later product, which we call PostPe. Our aim is to democratise credit, irrespective of how small or big the transaction is. Also,BNPL works online and on point of sale (PoS) machines. We want to take it to UPI — in the beginning through our closed-loop network on merchants and eventually as guidelines come, to expand it to the rest of the payment ecosystem. PoS has 2.5 million merchants but on UPI there are 25 million merchants. BNPL can be used from the existing few lakh shops to the full retail ecosystem.
We will also expand the scope of Payback to not just a loyalty programme but payments, credit, and investment loyalty programme. It will turn into a full-service financial services platform for consumers.
What do you see as the growth potential for Unified Payments Interface?
There is huge headroom for UPI, won’t be surprised if it keeps growing at five per cent to 10 per cent per month. UPI is just ahead of credit and debit cards in the country today. The next leg of growth for UPI will come from tier 2 and 3 cities. Smartphone penetration will always be higher than credit card penetration.
Between lending, payments and banking, what will be the key focus?
The number 1 priority will be to continue to expand the merchant network. We have 7.5 million merchants. We want to keep expanding the merchant network, We are in 140-150 cities. The priority for the next two years is to get to 20 million-plus merchants and 400 cities. The number two priority is to both scale the existing credit products and launch new credit products for merchants. Till now, we had only unsecured products and now we are launching secured lending products. The third priority is to get the bank up and running and then launch the consumer business.