This Indian Start-Up Wants To Bring More Customers To the Digital Payments Landscape
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Akash Sinha has always had the proverbial entrepreneurial itch. From trying to build a social network for workplaces to running a portal that would match entrance exam scores with the qualifying institutions during his undergraduation, he has dabbled a fair bit into starting up to know how it works.
“It’s always been about looking at the problems in the market and trying to solve them; that’s what you do as an entrepreneur,” he says.
Sinha is now the co-founder and chief executive officer of Cashfree, a payments and banking technology company that primarily deals with enabling businesses across the country to collect and send money.
Founded with Reeju Datta in 2015, the Bengaluru-based start-up has grown significantly over the years. Backed by Y-Combinator and incubated by global payments firm PayPal, the company’s services are now used by well-known consumer internet brands such as Dunzo, Nykaa and Milaap.
Last year, it raised a $5.5 million Series A round led by South Korean venture capital firm Smilegate Investment.
Cashfree may be solving for the online payments space right now but it didn’t quite start that way.
“In hyperlocal, if you ordered via cash on delivery, you couldn’t pay digitally when the delivery executive came back then, so we built an app where, before he came, you would get a link to pay via any of the digital modes - credit cards, debit cards and net banking,” says Sinha.
According to him, it was a fairly novel idea back then, and they had managed to partner with close to 300 offline stores in Bengaluru, but as a start-up in its formative days, the idea was difficult to scale. At the time, the company interacted with many online businesses as well and that’s when Sinha and Dutta figured that there existed a payments collection problem in the online space.
Within six months, the company had changed its course, going full-throttle into pushing the bar higher for online payments.
What It Offers
Over time, the company has grown to expand the suite of products that it offers. One of its early offerings and something that Sinha believes gave them a competitive advantage was solving for bulk payouts.
“They (merchants) had an automated way of collecting payments, but when you had to pay money back to your customers or your vendors, that process was largely manual, to do it scale took a lot of manpower making it cumbersome and open to errors, so we saw an opportunity there and caught hold of it.”
Cashfree then built and started offering a single platform in 2017 where merchants could collect and disburse money automatically. This feature really pushed things forward for the company in a big way, according to Sinha.
Another feature that the company introduced was instant refunds, which it claims was a first for a payment gateway.
Apart from bulk payouts and instant refunds, some of the other features that the company now offers include pre-authorization where one can block funds temporarily and debit the amount on fulfilment, subscriptions which have recurring payments via e-mandate and instant settlements.
Instant settlements, which is a recently introduced feature, solves for the cash flow issue of businesses, Sinha says.
“As part of this feature, as soon as the customer pays, we give the money within 15 minutes, so that he can do more with his business.”
Separately, the start-up has now launched products for lending companies and non-banking financial companies, to enable seamless loan disbursals to businesses and individuals across all platforms.
As with many other start-ups in the fintech space, Cashfree too has spent a lot of time on developing the unified payments interface (UPI) stack. Currently, cards still have the biggest share on the company’s platform, comprising about 60 per cent while UPI has managed to make a dent into netbanking, with a 15-20 per cent share already.
Profitable for the last three fiscal years, Cashfree has also grown its topline rapidly. The last fiscal year saw revenues doubling on a year-over-year basis and Sinha says he expects the growth to accelerate going forward.
The company currently processes more than $10 billion worth of transactions on an annualized run rate basis, reflecting a 25 per cent monthly growth and hopes to take these numbers to $30 billion by the end of the calendar year. On the merchants side, where it currently has a base of 55,000, it expects a nearly 10x growth by the end of 2020.
On where he sees the company in the next few years, Sinha seems optimistic and it’s not just about grabbing a larger chunk of the existing pie.
“Right now, most of the payment companies are fighting for the same pie but someone has to put an extra effort to increase that pie; if you see the e-commerce space, 50-60 per cent of the orders are still COD, so as a payment company you should also try building things that would reduce the use of cash and bring more consumers on the digital payments space.”