B Capital-backed merchant lending and offline payments company MSwipe received in-principle approval from the Reserve Bank of India (RBI) for the payment aggregator licence on August 8. The company, which provides point of sales (PoS) devices for offline payments, will now plan a foray into the online payments space with the launch of its online payment gateway.
In a conversation with Moneycontrol, Ketan Patel, CEO of MSwipe, said that the company will be launching its gateway in the next three months.
“The payment gateway is ready but we were waiting for the green signal on the licence. The idea behind applying for the licence was that we wanted to be a full-stack payments player – from Quick Response (QR) codes to payment gateway,” he said.
Founded by Manish Patel in 2011, MSwipe’s customers for its offline payments include multinational pizza chain Dominos, airlines Vistara, GoFirst and Spicejet, e-commerce player Flipkart, food delivery app Zomato and ticket booking app BookMyShow. Online players use MSwipe’s PoS machines to accept card and QR-based payments for cash-on-delivery transactions.
As a new entrant in the online payments space, MSwipe will be competing with incumbents like Razorpay, PayU, CCAvenues and BillDesk. Patel said that the company will first look at its current merchant base and then aim to focus on small and medium enterprises (SMEs).
“Around 600 merchants are using the PoS terminals, so we plan to give them the option to use our payments gateway. Besides them, we will focus on SMEs with a turnover of Rs 50-200 crore. We don’t want to fight for a pie of larger businesses where large payment gateway players are already present.”
Patel said that MSwipe, backed by investors like Falcon Edge, Equip Capital and B Capital Asia, turned EBITDA positive in 2021-22, while the company is yet to report its earnings for the year. In FY21, MSwipe reported a revenue of Rs 240 crore which, Patel said, has increased to around Rs 350 crore for FY22.
A payment aggregator provides services for merchants and e-commerce sites by accepting payment instruments from customers. As part of the process, they pool the funds received from customers and transfer them to merchants after a certain time.
Payment gateways, on the other hand, simply provide technology services to businesses for processing transactions. They do not have any involvement in handling of funds. However, the licence is important for companies that handle online payments. Pine Labs, Razorpay and Stripe were among the first to get the licence.
Merchant sound device plans
Another product that MSwipe is launching is a sound device that announces receipt of payments for merchants for QR Code-based payments. At points where companies deploy QR Codes, there is no source of revenues as merchants are not supposed to pay any charges for accepting payments through the Unified Payments Interface (UPI).
In such a scenario, the sound device acts as a source of revenue as the merchant pays an upfront amount as well as a monthly rental for the device. Once these companies onboard merchants and customers, they can cross-sell other revenue-generating products including merchant loans.
MSwipe plans to increase its merchant loan disbursals from Rs 70 crore in FY22 to Rs 200 crore in FY23.
Patel said that the company plans to launch the device, named BoomBox, in the next 15 days. The company has priced the device at an upfront cost of Rs 300 and monthly rentals at Rs 125, in-line with market leader Paytm’s average rental.
“We are targeting to deploy around 300,000 BoomBoxes in the next 12 months, and 10,00,000 in the next 24 months. We believe that sound devices will be an important source of revenue for all players going forward,” he said.
Moneycontrol was first to report that UPI leader PhonePe too has launched the device at a price much lower than Paytm on August 3. PhonePe charges no upfront cost to merchants to install the device and the monthly rental is set at Rs 49. BharatPe too launched the device in March this year. The sound device is at the heart of the feud between PhonePe and Paytm as price wars heat up.
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