Pure-play payments space will have only 10 serious players in next 3 years: BillDesk’s MN Srinivasu

Srinivasu added that India’s fintech space is a very regulated space and it needs serious players to survive. “Startups that enter thinking this is a B2C game, a valuation game, or quick money then that is not going to work. Scale and governance will matter and people, who play by the rules will survive,” he added.

Harshil Mathur, co-founder and Chief Executive Officer of payment solutions provider Razorpay added that the competition in the space has come down over the years.

“The number of players competing has gone down in the last few years in the fintech industry for various reasons. However the core payment stack has always been commoditised,” he said.

Problems relating to payment faced by the SMEs and enterprises is huge compared to the payment solutions that are available in the market, Mathur added.

“This is where the actual differentiation will happen and that is where the profit pools lie. This is going to be a focus area for many players in the coming days,” he added.

Managing the tech cost

Talking about the biggest cost factors for B2B payment solutions players, both Mathur and Srinivasu said that cloud and tech cost still remains the most extensive line item of expenses.

“The biggest cost factor even today is the cloud cost… As a payment player the tech cost like the people cost of tech, the infra cost of tech followed by the innovation cost of tech are some of the biggest line items of expenses. The amount of spending on marketing and advertising is fairly low,” Mathur said.

“Tech remains one of the largest fixed costs even today. Around 90 percent of the revenue is still paid to the banking world or the interchange world and you can at best optimise on that 10 percent you have,” Srinivasu said.

Co-moderator of the session, Kumara Raghavan, India Head of Startup Sales Segment at AWS, underlined various ways AWS helps tech startups to optimize their cloud costs, including providing them with the elasticity to scale up or bring down cloud usage as required.

“The second part is about the innovation that we are able to do on behalf of our customers, and make sure that the cost of that innovation is brought down consistently,” said Kumara, “One thing we want to bring is predictability in how we price our offerings, and our philosophy is to constantly reduce prices. Since our inception in 2006 to September last year, we have reduced prices 129 times.”

IPO on the cards

Razorpay, which is in the process of reverse-flipping its domicile back to India is looking to go for an IPO in the next two to three years.

“IPO is definitely the place where we want to be and it is two to three years away for us or a little bit more than that. It also depends on the market,” Mathur said.

While entering the IPO market is the ultimate goal, there is no pressure on liquidity, Mathur and Srinivasu added.

“There is no pressure from our side to go for an IPO. It will be the function of liquidity for investors and market timing. It will happen whenever it has to happen,” Srinivasu said.