Empowering Indian Merchants BharatPe’s Fintech Revolution in Digital Payments and Lending

BharatPe is revolutionizing digital payments and lending for Indian merchants and SMEs with its no-cost UPI solutions, QR code payments, and merchant credit services.

Admin Admin
Oct 23, 2024 - 11:47 Updated: Oct 23, 2024 - 11:49
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Empowering Indian Merchants BharatPe’s Fintech Revolution in Digital Payments and Lending
Empowering Indian Merchants BharatPe’s Fintech Revolution in Digital Payments and Lending

Company Highlights:

  • Established: 2018
  • Founders: Ashneer Grover and Shashvat Nakrani
  • Headquarters: New Delhi, India
  • Leadership: Suhail Sameer (Former CEO), Rajnish Kumar (Chairman)
  • Funding: Secured over $700 million from prominent investors such as Sequoia Capital, Insight Partners, Ribbit Capital, and Coatue Management.
  • Valuation: Estimated at $2.85 billion in 2021
  • Core Offerings: UPI-based digital payments, QR code transactions, merchant lending, and BharatPe POS systems.
  • Key Milestones: First fintech to introduce interoperable QR codes, creating one of India’s largest networks for merchant payments.

About Us:

BharatPe is a leading fintech company focused on transforming the digital payment landscape for small businesses and SMEs in India. It offers merchants a zero-cost UPI payment solution, allowing them to accept payments through a single, interoperable QR code. BharatPe also extends financial services like business loans and working capital to help merchants grow their businesses. The company is committed to driving financial inclusion and empowering India’s small business ecosystem through seamless payment and lending solutions.

Industry Overview:

  • Industry: Fintech, Digital Payments, Lending
  • Sector: Financial Technology
  • Target Market: Small businesses, kirana stores, SMEs
  • Market Dynamics: BharatPe is part of India’s rapidly evolving fintech industry, fueled by the widespread adoption of UPI payments, increasing smartphone usage, and government initiatives promoting digital and cashless transactions. The company’s focus on providing credit solutions aligns with the rising need for financial inclusion, particularly among underserved small businesses and merchants across the country.

Founders and Team:

  • Ashneer Grover: Co-founder and former Managing Director of BharatPe, Ashneer Grover is a well-known figure in the Indian startup ecosystem. He has a background in finance, having worked with Kotak Investment Bank and American Express prior to founding BharatPe. Grover played a key role in driving the company’s growth and scaling its operations nationwide.

  • Shashvat Nakrani: Co-founder, Nakrani, at the age of 23, co-launched BharatPe. He is an IIT Delhi alumnus and has been pivotal in designing the company’s core payment solutions. His vision was to empower small merchants across India by providing them with a seamless digital payment system, helping them thrive in an increasingly digital economy.

  • Key Team Members:

    • Suhail Sameer: Former CEO of BharatPe, Suhail led the company through a crucial phase of its expansion, overseeing its entry into financial services like lending and ensuring the operational efficiency of its merchant-focused products.
    • Rajnish Kumar: Chairman of BharatPe and former Chairman of the State Bank of India (SBI), Rajnish brings extensive financial expertise to the team, guiding the company's strategic direction, especially in terms of scaling and managing risk.

Startup Story:

BharatPe was founded in 2018 with a mission to solve a pressing problem for India’s small merchants: the complex and fragmented nature of digital payments. Ashneer Grover and Shashvat Nakrani identified a gap in the market, where small businesses were struggling to adopt digital payment solutions because they had to manage multiple QR codes for different payment apps like Paytm, Google Pay, and PhonePe. This led to a lack of efficiency and higher operational costs for small shop owners.

The co-founders envisioned BharatPe as a platform that would offer a single, interoperable QR code for UPI payments, enabling merchants to accept payments through any payment app. This innovation was revolutionary, making BharatPe the first fintech in India to introduce such a solution. The simplicity of the BharatPe QR code system attracted a vast number of small merchants across India, helping them join the digital payment ecosystem with zero transaction fees.

Over time, BharatPe expanded its offerings beyond payments, venturing into merchant credit and lending services, addressing another major challenge faced by small businesses: access to working capital. The company introduced innovative financial products like loans and BNPL (buy now, pay later) solutions to provide merchants with easy access to credit, further cementing BharatPe’s position as a leading fintech in India.

Within a few years, BharatPe grew rapidly, becoming a unicorn in 2021, valued at $2.85 billion. The company’s success story is rooted in its deep understanding of the needs of India’s small business owners and its commitment to empowering them with tech-driven financial solutions.

Mission:

BharatPe’s mission is to empower small merchants and businesses across India by providing them with simple, cost-effective, and innovative digital payment and financial solutions. The company aims to democratize access to financial services, helping underserved merchants thrive in an increasingly digital economy by offering seamless payment options and access to capital.

Vision:

BharatPe envisions becoming the leading fintech partner for millions of small merchants and SMEs in India, driving financial inclusion by bridging the gap between traditional banking and the evolving digital landscape. The company aspires to build a robust digital ecosystem where every merchant, regardless of size, can leverage technology to grow and sustain their businesses.

Goals:

  1. Expand Merchant Network: Continue to grow BharatPe’s merchant base by onboarding millions of small businesses, providing them with easy-to-use digital payment and financial solutions.

  2. Enhance Financial Inclusion: Provide access to financial services like working capital loans and credit products for small businesses that are often underserved by traditional banks.

  3. Innovate Payment Solutions: Continuously improve and develop new technologies, including UPI-based payment systems, QR codes, and POS systems, to simplify digital transactions for merchants.

  4. Scale Lending Services: Further expand BharatPe’s lending services to support more merchants with timely credit options and drive growth within India’s SME sector.

  5. Sustain Growth and Profitability: Strengthen the company’s market position, ensuring long-term sustainability and profitability by diversifying its offerings and expanding into new verticals.

  6. Lead Digital Transformation in Fintech: Become the market leader in India’s fintech space by driving digital transformation, with a focus on providing seamless and integrated financial solutions to businesses of all sizes.

Business and Revenue Model:

BharatPe operates with a merchant-first approach, providing solutions to small businesses for digital payments and financial services. Its primary revenue streams are:

  1. Payments through QR Codes: BharatPe provides interoperable UPI-based QR codes to merchants, allowing them to accept payments from all major digital wallets like Paytm, PhonePe, Google Pay, and others. While the payments themselves are offered at no cost to the merchants, BharatPe benefits by building a large network of merchants for cross-selling financial services.

  2. Merchant Lending: BharatPe earns a significant portion of its revenue through its lending services. It provides small businesses and merchants with working capital loans, and generates revenue by charging interest on these loans. The loan disbursement is seamless, as it is based on the transaction history and data from merchant payments.

  3. Buy Now Pay Later (BNPL): BharatPe has entered the BNPL space, allowing merchants to purchase goods or services on credit and pay later. This also contributes to revenue through interest and fees.

  4. POS Devices: BharatPe offers Point of Sale (POS) machines, which not only help merchants accept card payments but also allow BharatPe to generate revenue from service fees associated with card transactions.

  5. Credit and Financial Products: BharatPe also monetizes its platform by offering various financial products, such as insurance and credit, to its merchant base. The company earns through commissions and service charges on these products.

Fundings and Investors:

BharatPe has successfully raised significant capital from top global investors, enabling its rapid growth and expansion. Some key funding rounds and investors include:

  • Total Funding: Over $700 million
  • Key Funding Rounds:
    • Series A (2019): BharatPe raised $15.5 million led by Insight Partners and Sequoia Capital.
    • Series B (2019): The company raised $50 million in a funding round led by Ribbit Capital and Steadview Capital.
    • Series C (2020): BharatPe secured $75 million, co-led by Coatue Management and Ribbit Capital.
    • Series D (2021): BharatPe raised $370 million, led by Tiger Global, taking its valuation to $2.85 billion and achieving unicorn status.
    • Series E (2022): BharatPe raised an additional $100 million from investors such as Dragoneer Investment Group and Sequoia Capital.

Key Investors:

  1. Sequoia Capital: A leading global venture capital firm that has backed BharatPe from its early stages.
  2. Ribbit Capital: A fintech-focused venture firm that has been a significant investor in BharatPe, supporting its lending and financial service offerings.
  3. Insight Partners: A growth-stage investment firm that contributed to BharatPe's early expansion.
  4. Coatue Management: A tech-focused hedge fund that led later funding rounds to help BharatPe scale its services.
  5. Tiger Global: A major investor in BharatPe’s Series D, which helped it achieve unicorn status.

Business and Revenue Model:

BharatPe operates with a merchant-first approach, providing solutions to small businesses for digital payments and financial services. Its primary revenue streams are:

  1. Payments through QR Codes: BharatPe provides interoperable UPI-based QR codes to merchants, allowing them to accept payments from all major digital wallets like Paytm, PhonePe, Google Pay, and others. While the payments themselves are offered at no cost to the merchants, BharatPe benefits by building a large network of merchants for cross-selling financial services.

  2. Merchant Lending: BharatPe earns a significant portion of its revenue through its lending services. It provides small businesses and merchants with working capital loans, and generates revenue by charging interest on these loans. The loan disbursement is seamless, as it is based on the transaction history and data from merchant payments.

  3. Buy Now Pay Later (BNPL): BharatPe has entered the BNPL space, allowing merchants to purchase goods or services on credit and pay later. This also contributes to revenue through interest and fees.

  4. POS Devices: BharatPe offers Point of Sale (POS) machines, which not only help merchants accept card payments but also allow BharatPe to generate revenue from service fees associated with card transactions.

  5. Credit and Financial Products: BharatPe also monetizes its platform by offering various financial products, such as insurance and credit, to its merchant base. The company earns through commissions and service charges on these products.

Fundings and Investors:

BharatPe has successfully raised significant capital from top global investors, enabling its rapid growth and expansion. Some key funding rounds and investors include:

  • Total Funding: Over $700 million
  • Key Funding Rounds:
    • Series A (2019): BharatPe raised $15.5 million led by Insight Partners and Sequoia Capital.
    • Series B (2019): The company raised $50 million in a funding round led by Ribbit Capital and Steadview Capital.
    • Series C (2020): BharatPe secured $75 million, co-led by Coatue Management and Ribbit Capital.
    • Series D (2021): BharatPe raised $370 million, led by Tiger Global, taking its valuation to $2.85 billion and achieving unicorn status.
    • Series E (2022): BharatPe raised an additional $100 million from investors such as Dragoneer Investment Group and Sequoia Capital.

Key Investors:

  1. Sequoia Capital: A leading global venture capital firm that has backed BharatPe from its early stages.
  2. Ribbit Capital: A fintech-focused venture firm that has been a significant investor in BharatPe, supporting its lending and financial service offerings.
  3. Insight Partners: A growth-stage investment firm that contributed to BharatPe's early expansion.
  4. Coatue Management: A tech-focused hedge fund that led later funding rounds to help BharatPe scale its services.
  5. Tiger Global: A major investor in BharatPe’s Series D, which helped it achieve unicorn status.

Shareholding:

BharatPe’s shareholding structure includes a mix of founders, investors, and employees. As of recent reports, the major stakeholders are:

  1. Founders and Management:
    • Ashneer Grover and Shashvat Nakrani, the co-founders, held significant equity stakes, although Grover's shareholding reduced following his departure from the company.
    • Shashvat Nakrani continues to be a key shareholder.
  2. Investors:
    • Sequoia Capital, Insight Partners, Ribbit Capital, Coatue Management, and Tiger Global are among the largest institutional investors. These investors have acquired stakes through multiple funding rounds, making up a substantial portion of the company's ownership.
  3. Employee Stock Option Plan (ESOPs):
    • BharatPe has an ESOP program for its employees, allowing them to benefit from the company’s growth by owning a stake in the business.

Growth and Revenue:

  • Growth: BharatPe has seen rapid growth since its inception in 2018, scaling its merchant base and expanding its service offerings. The company quickly became a unicorn in 2021, achieving a valuation of $2.85 billion. BharatPe's strategic focus on providing no-cost UPI payment solutions and lending services to small merchants has helped it scale its user base and maintain high growth momentum.

    • The company claims to have onboarded over 8 million merchants across 400+ cities in India.
    • BharatPe also disbursed over $500 million in loans to merchants, reflecting strong demand for its credit services.

  • Revenue: BharatPe’s primary revenue comes from its lending services and financial products, including POS device fees, interest on merchant loans, BNPL fees, and commissions from third-party products like insurance. As BharatPe scales its lending business and introduces more financial services, its revenue has increased steadily.

    • In FY2022, BharatPe's reported annualized revenue run rate was between $100 to $150 million, with expectations of strong future growth as the lending portfolio expands.

Competitors:

BharatPe operates in the highly competitive Indian fintech and payments landscape. Key competitors include:

  1. Paytm:

    • One of India’s largest and most recognized digital payment companies. Paytm provides services across payments, wallet, lending, insurance, and wealth management, offering fierce competition to BharatPe.

  2. PhonePe:

    • A digital payment platform backed by Walmart, PhonePe is one of BharatPe’s main rivals in the UPI space. It also offers QR code payments, financial services, and merchant-focused products.

  3. Google Pay:

    • Google Pay is a major player in UPI-based digital payments in India. While it focuses more on peer-to-peer (P2P) payments, it also competes with BharatPe for merchant solutions.

  4. MobiKwik:

    • A digital wallet and payment gateway, MobiKwik competes with BharatPe in providing digital payments and lending services to small merchants.

  5. Razorpay:

    • Razorpay is another competitor in the payments space, offering payment gateways, POS solutions, and lending services to businesses of all sizes, including small merchants.

  6. Cred:

    • Although primarily focused on premium users, Cred offers BNPL and lending services, putting it in indirect competition with BharatPe in terms of financial products for individuals and small businesses.

  7. Pine Labs:

    • A major player in the POS solutions and merchant services space, Pine Labs competes with BharatPe in providing card-based payment solutions and credit to merchants.

Future Plans:

BharatPe has several strategic plans aimed at enhancing its growth trajectory and expanding its service offerings in the coming years:

  1. Expansion of Financial Services: BharatPe plans to introduce a wider range of financial products, including insurance, investments, and savings accounts, to cater to the diverse needs of its merchant base. This will help position BharatPe as a comprehensive financial partner for small businesses.

  2. Geographic Expansion: The company aims to extend its services beyond major urban areas into smaller towns and rural regions, tapping into the vast potential of India’s unbanked and underbanked populations.

  3. Strengthening Lending Operations: BharatPe intends to enhance its lending capabilities by leveraging advanced analytics and machine learning to assess creditworthiness and improve loan offerings. This includes personalized loan products tailored to the unique needs of different merchant segments.

  4. Technological Innovation: The company is committed to investing in technology to streamline its operations and improve user experience. This includes enhancing its payment gateway, developing more sophisticated fraud detection mechanisms, and exploring blockchain solutions for increased transparency and efficiency.

  5. Partnerships and Collaborations: BharatPe plans to forge strategic partnerships with banks, fintech companies, and technology firms to expand its service offerings and improve operational efficiency. Collaborations can help enhance its product ecosystem and reach a broader customer base.

  6. Focus on Customer Education: BharatPe aims to invest in educating its merchant base about digital payments and financial literacy, helping them make informed decisions regarding their financial services. This initiative is expected to drive adoption and enhance customer loyalty.

FAQ:

1. What is BharatPe?
BharatPe is a fintech company that provides digital payment solutions and financial services to small merchants and businesses in India. Its offerings include UPI-based payments, QR codes, and merchant lending.

2. How does BharatPe’s QR code work?
BharatPe provides merchants with a single interoperable QR code that allows them to accept payments from multiple digital wallets and UPI apps, simplifying the payment process for both merchants and customers.

3. Are there any fees for using BharatPe?
BharatPe offers no-cost UPI payment solutions to merchants, meaning they do not incur transaction fees for accepting payments through the BharatPe QR code.

4. How does BharatPe provide loans to merchants?
BharatPe uses transaction data from its payment services to assess the creditworthiness of merchants. It offers working capital loans based on their transaction history, making the process quick and efficient.

5. What types of businesses can use BharatPe?
BharatPe primarily targets small merchants, kirana store owners, and small to medium enterprises (SMEs) across various sectors, including retail, food and beverage, and services.

6. Is BharatPe available in all parts of India?
While BharatPe initially focused on urban areas, the company is actively working to expand its services to smaller towns and rural regions to reach more merchants across the country.

7. How can I contact BharatPe for support?
Merchants can contact BharatPe’s customer support through the app or the company’s website for assistance with their services, inquiries, or issues.

8. Can BharatPe be used for international payments?
Currently, BharatPe focuses on domestic payments through UPI. International payments may not be supported at this time, but the company may explore such options in the future.

9. What security measures does BharatPe have in place?
BharatPe employs multiple security protocols, including encryption and fraud detection mechanisms, to ensure the safety and security of transactions for both merchants and customers.

10. How can I become a BharatPe merchant?
To become a BharatPe merchant, you can sign up through the BharatPe app or website, provide the required documentation, and follow the onboarding process to start accepting digital payments.

Here are some of the latest updates regarding BharatPe:

  1. Settlement with Ashneer Grover: Ashneer Grover, co-founder and former managing director of BharatPe, has reached a settlement with the company, effectively ending a prolonged legal dispute that began after his removal in March 2022. As part of this settlement, Grover will no longer have any association with BharatPe, and his shares will be managed by a family trust. This development marks a significant resolution for both parties, allowing BharatPe to move forward without the legal uncertainties surrounding Grover's claims​ Business Standard
  2. Financial Performance: BharatPe reported a notable improvement in its financial health for FY24, narrowing its losses by approximately 50% to ₹474 crore, compared to ₹941 crore the previous year. The company's revenue from operations increased by 39%, reaching ₹1,426 crore​
    Rediff
    . This financial progress is attributed to a focus on operational efficiency and scaling its lending vertical.
  3. Future Focus: BharatPe's management is optimistic about its future, having achieved EBITDA positivity in October 2024. The company plans to continue expanding its offerings, particularly in its lending segment and new products related to point-of-sale systems and soundboxes​
    Rediff

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