July 23, 2015
The Indian payments industry is witnessing strong growth and is gaining the confidence of the investors. US hedge fund Falcon Edge Capital, along with Meru Capital and ride hailing app Ola, has invested $25 million in Mumbai-headquartered mobile point-of-sale (POS) services provider Mswipe Technologies. Existing investors like Matrix Partners India, Axis Bank and DSG Consumer Partners also participated in the round. Avendus Capital acted as the primary investment bank for the transaction. Founded by Mumbai University graduate Manish Patel in 2011, the startup caters to both, small and medium enterprises as well as enterprise clients such as McDonald's, Asian Paints and Reliance Life by offering a mobile-focused PoS device that allows merchants to undertake plastic card payments through smartphones as well as through ordinary feature phones. According to the company, Mswipe differentiates itself from other PoS service providers, such as Helion Advisors and Amex backed Ezetap, by focusing on acquiring merchants, rather than being seen as a device manufacturer. Currently, Mswipe has 30,000 merchants on board. Merchant acquisition is a fairly difficult task in India given that there are no good measures of merchant risk, as per payment advisory firm GrowthPraxis.
This is the series C funding for the mPOS startup which was established in 2011. The firm has previously raised funding from Axis Bank, DSG Consumer Partners and Matrix Partners India which is estimated to be a little over $7 million.
Mswipe is a wireless payment system which provides mobile payment service to SMEs and enterprise clients. It also allows merchants to undertake plastic card payments through smartphones or ordinary feature phones, thus eliminating the cost of integrating conventional POS.
At present, Mswipe has 30,000 merchants on board which includes clients such as McDonald's, Asian Paints and Reliance Life. The startup plans to deploy the funds to further accelerate its aggressive growth, get more merchants on board and increase customer success.
"The ambition is to significantly grow our business, and expand our network to one million merchants by 2020. There are 10-12 million SMEs in India while only about 500,000 have POS terminals currently. We're competing with the banks, and our platform continues to integrate multiple layers that give a tremendous insight into a small and medium-sized business as well as provide credit scores," said Manish Patel, Founder and Managing Director of Mswipe to The Times of India.
This is the first time that Ola has made an investment in a card acceptance system. For few, it might seem strange, but there is a strategic motive behind this investment. Every company in India is trying to provide seamless and convenient payments to its users. Payments have been the Achilles heel, for ride hailing app companies due to the constant integration of multiple payment systems. Integration of mPOS terminals in cabs will make payments easy and convenient for both users and chauffeurs.
Currently, India has around 80,000 mPOS terminals of the million plus total POS terminal as per GrowthPraxis. Nearly 80% of the retail market in India does not have POS installations to offer card-based payments, so there is a huge white space for mPOS solution providers. Other than Mswipe, companies like Ezetap, Paynear, MRL Posnet, iKaaz, AasaanPay, Mosambee, MobiSwipe and PayPOS are the players operating in the same segment. The low cost of devices is the key USP of mobile POS players in India.