US-based fintech fund Ribbit Capital, has placed its bet on two fintech companies—Cred and BharatPe—that play a major role in India’s 66 billion dollars worth fintech market, the latest testament to India’s fast-growing fintech industry that has been attracting global capital.
Bengaluru-based Cred, owned by Kunal Shah, who earlier sold his payment company Freecharge to e-tailer Snapdeal for USD 400 million, has raised USD 120 million in a Series B round led by Ribbit Capital, Gemini Investments and Sequoia Capital. On the other hand, Delhi-headquartered BharatPe raised USD 50 million, in its Series B round led by Ribbit Capital and Steadview Capital along with Sequoia Capital, Beenext Capital, and Insight Partners.
While nine-month-old Cred will use the funding for international expansion and to develop new products in partnership with banks, BharatPe will scale up its operations across India.With its latest funding, Cred’s valuation stands at around Cred’s valuation stands at around USD 450 million, a-year-old BharatPe is now valued at USD 225 million.
A members-only app, Cred gives rewards in the form of digital coins and gems for timely payment of credit card bills to be redeemed at coffee shops, movie theatres, and e-commerce platforms, among others.
According to India’s central bank, Reserve Bank of India (RBI), there are less than 50 million credit cards in circulation as of March this year. Keeping these numbers in mind Cred’s Shah says, his company is in talks with various banks for collaboration to offer personal loans through credit cards. He does not want to compete with banks but be their face to ramp up credit card usage in the country.
Cred does not charge users for using its platform, but makes money from some of the partners that give offers on the app. Its partners include online ticketing platform BookMyShow, omni-channel furniture platform Urban Ladder, accommodation-sharing platform Airbnb, health and fitness startup CureFit, food-delivery app FreshMenu, among others.
Co-founded by former executives at grocery e-tailer Grofers, BharatPe helps small businesses, mostly first-timers to accept digital payments and also secures working capital for them. The firm has a current annualized total payment volume of USD1 billion, and manages18 million United Payments Interface (UPI) payments every month. It claims to have operations in 20 Indian cities catering to over 1.45 million merchants.
India may well possess the second largest internet market, but it is still just 500 million users out of a population of 1.3 billion. BharatPe seeks to bring into its ambit this large offline chunk many of whom are small-time merchants running roadside businesses. To make these merchants adopt digital payments, BharatPe wants to make the most of QR codes.
“We get them to put up a QR code in their shops, and any customer that uses a UPI-powered payments app — which is now supported by nearly every payments app in India — can pay these shop owners digitally,” Ashneer Grover, co-founder, BharatPe told Techcrunch.
Later BharatPe intends to connect suppliers and merchants by syncing their accounts to bolster its service.
According to Invest India, an agency to promote investments in the country, India ranks second in the fintech adoption rate globally. India has an average of 58% fintech users, compared to 34.2% users in western developed markets. Key drivers of this growth include widespread use of identity establishment cards (Aadhar), high penetration of banking services and smartphone usage, increasing disposable income and key government financial initiatives such as UPI.
Six years ago, Indian fintech companies attracted less than 100 million dollars in investment. In Q1 2019, Indian digital payment companies attracted investments totaling USD 286 million, overtaking China’s USD 192.1 million.