This API-Based Fintech Helps Businesses Work With Banks Efficiently
Yap recently raised $4.5 million as a part of its Series A round, led by Singapore-based venture capital firm BEENEXT
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The year 2016 facelifted the banking sector in this country. The demonetization—imposed by Narendra Modi-led government to arrest the circulation of counterfeit currency and black money—acted as one powerful thrust for the complete digitization of transactions.
According to the Payments Council of India report in 2017, the growth rate of the digital payments industry, which was earlier in the range of 20-50 per cent, accelerated to 40-70 per cent post demonetization.
While for many businesses and fintechs it took a demonetization to realize the importance of digitization, Yap understood the need of digitization much before and started working on it since 2013.
In an interaction with Entrepreneur India, Madhusudanan R., founder of Yap, shares the journey of the startup and how it is helping business work closely with banks.
Help Business Work Closely WIth Banks
After working for 16 years in various payment companies such as Citi and Visa, Madhusudanan realized that there was a need to help businesses launch their own payment products.
"While I was working with Visa, I noted that a lot of companies wanted to work on different projects with banks, but were stalled because banks have their scheme and strictly follow regulations," said Madhusudanan.
"I realized that there is a role for somebody to sit outside the bank and help both parties in the ecosystem."
He observed that on one hand banks were struggling to offer technology-enabled solutions to their corporate customers and on the other hand, these companies were failing to comprehend and comply with banks policy.
Apart from this, during that time Madhusudanan and his team noted the emergence of e-wallets and how they were disrupting the payment mode.
"We realized there was an utmost need for a collaboration between banks and businesses to gain customers' trust over convenience," he added.
And thus in 2014, Madhusudanan along with Muthukumar A. and Prabhu R. founded Yap. In the past five years, the fintech startup has grown into a full-stack (application program interface) API based platform that helps companies to roll out their own payment products rapidly.
The firm recently raised $4.5 million as a part of its Series A round, led by Singapore-based venture capital firm BEENEXT.
Full Stack API M2P Solutions Provider
The Chennai-based firm enables banks, fintechs and retail brands across Asia to deliver new-age banking experiences to their end customers. The fintech helps businesses to connect and roll out their own branded products. The company works with banks and financial institutions as product providers and offers end-to-end programme management services over a bundle of APIs.
YAP is working with 15 banks, which includes Yes Bank, DCB Bank, Equitas SFB, SBM Bank, among others.
The B2B startup has four types of customers.
Banks: The fintech works closely with banks and acts as a product provider. Taking an example, Madhusudanan said, "Bank provides Forex cards to its customers who are planning international trips. However, when we develop a Forex card, it is integrated with all modern technology. It has a companion app and is always connected to the visa system directly. It can even direct you to the nearest ATMs."
Fintechs: The startup is currently working with more than 200 plus fintechs in India. The firm builds technology and offers enhanced API products to fintechs which are focusing on enabling access to credit, corporate banking solutions, cross border payments and providing neo-banking solutions.
Consumer Internet companies: Madhusudanan said the key difference between fintech and consumer Internet companies is the size. "Since the latter is much bigger in size they have more aspirations, but the problem solving that we do for them is the same to that of fintech," he added. One such example of a consumer Internet company to whom Yap is providing solutions is Ola.
Older generation company: These are typically those popular local companies who have earned trust from the customers over the ages but are now threatened by the new-age emerging companies that are solving customers' problems within minutes on the back of cutting edge technologies. Yap helps these old age companies to mark their presence in this technology-driven world.
The BEENEXT-backed startup offers financial solutions such as gift card/payroll card or multicurrency cards. As a wallet issuer, YAP allows one to provide their customers physical or virtual prepaid cards linked to their product. The startup also offers fleet payment solutions and QR code solutions to its clients.
COVID-19 Impact and Future Plans
The COVID-19 outbreak has not spared any businesses across the sector. Stringent lockdowns, followed by extreme uncertainties, have negatively impacted businesses throughout the world.
According to Madhusudanan, few of the businesses with which Yap was closely working took a massive hit due to the virus outbreak. Giving example, he said the travel businesses might see a positive curve only after 6-12 months. He also said lenders had halted lending during April and May because of the moratorium period. However, he believes lending business will restore to normalcy in the next two months.
"In some cases, we have accelerated some of the product implementations and witnessed growth similar to pre-COVID days," he added.
The company in the last financial year has processed about $2 billion in payment volume that was over 50 million transactions. Currently, the fintech is working with more than 250 companies and plans to collaborate with more than 100 companies by the end of this year.
The company last year went global and made its presence in Australia, New Zealand, Philippines, UAE, and Nepal and wants to enter other markets in the post-COVID19 world.
The firm was growing at 400 per cent in terms of revenue generation last year. However, now it is looking at growing somewhere between 200 to 300 per cent for the next two to four years.