After launching loans for its small and medium-sized merchants last year, BharatPe is looking to expand its financial services stack with working-capital loans, credit cards and other loan products, its newly appointed group president Suhail Sameer told MediaNama.

BharatPe’s was recently valued at $500 million backed by investors like Sequoia Capital, hedge fund Coatue Management and Insight Partners. With a user base of over 5 million merchants, the company is now setting its sights on becoming a digital lending app, as opposed to a payments app, and is working on new loan products with its lending partners. “We fundamentally believe that it is tough to make money in payments in India, as retailers operate at very low margins. We are pushing lending and cross-selling other services and I expect lending to contribute to at least 80% of our revenue in the times to come,” Sameer said. He added that the company plans to apply for a license to become an NBFC and at some point in the future it will look at scaling to become a bank.

Company looks to launch cards, other lending products

“We are looking at launching cards, one-month cash advance, some secured lending products and distributor financing going forward,” Sameer said. Since the company is not licensed by the RBI to provide loans, it has tied up with four Peer-2-Peer lenders and a few standalone NBFC players. All loan requests below ₹10 lakh made by a merchant on BharatPe’s network are funded by P2P lenders, whereas for merchants who want a loan more than ₹10 lakh, the credit is provided by an NBFC, he explained.

“In January-February, we were disbursing loans around ₹10-12 crores a month. But once the economy opened up post Covid lockdowns, the lending platform started scaling up from ₹15 crores in July to ₹100 crores in October. This month we will probably disburse ₹130 crore worth of loans. Around 60% of these loans are provided by Peer-2-Peer (P2P) lending partners and the remaining from regular non-banking finance company (NBFC) partners […] We will have totally disbursed ₹650 crores worth of loans by the end of this month, and around 150,000 unique merchants have received these loans,” Sameer said.

‘Targeting $10 billion transactions this year’

“From the lows of April and May, our transactions are up by 3.5x on the back of UPI doubling,” said Sameer. In October, the company roughly did $6 billion of annualised transaction value; increasing its market share and Total Payment Volume (TPV). “We also launched a card acceptance machine in early August, which is scaling well and we are currently processing US $2 billion annualized transaction value through these machines. We have deployed around 35,000 devices and each device is doing ₹3.5 lakh a month.”

The company is expanding to 65 cities by December end and hopes to deploy 100,000 card machines by March 2021, he said. “This should lead to an annualized transaction value of US$5 billion at least on the card side and in combination with the QR payments the company aims to close this fiscal by processing over $10 billion in annualized transaction value,” Sameer said.

‘Cost of acquisition has come down’

The company’s acquisition cost per merchant has come down slightly from ₹210-215 to ₹155. “This is mainly because there is a lot of inbound or organic interest from merchants downloading the app and ordering the QR codes themselves, compared to the past where we had to market the app to merchants physically.”

There are two trends that are emerging among the new merchants, he continued. “The first is on QR side where majority of new merchants are coming from the grocery space, whereas, in the past, 30% of our merchants were from restaurants which has been impacted significantly because of the pandemic. The second is on the back of the card machine. The quality of the merchants is one notch above the regular merchant and some standalone stores are showing keen interest to get card machines.”

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