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Economic disruptions due to the current pandemic have impacted funding globally, with venture capital-backed investments in India falling drastically between March and June 2020, compared to the same period the last year. Although, given the increased adoption of digital financial services during this period of social distancing, the fintech space in India has been relatively more stable, compared to other sectors such as e-commerce and consumer brands. .1
The Indian government, along with private fintech players, continue to work together to improve rural businesses’ access to digital platforms, including the Aadhaar Enabled Payment System (AePS) network, MATMs, mobile vans with mini tellers ATMs and bill payment kiosks, PoS machine handhelds, among others.2 This proliferation of data networks and internet access in rural areas of India is particularly helping to accelerate the adoption of digital payments by businesses in these regions, which otherwise rely heavily on physical banking services and online transactions. species.
This newsletter highlights major developments in the Indian fintech space from May 1, 2020 to July 31, 2020.
MARKET UPDATES AND MAJOR DEALS IN INDIA
Transaction volumes through the unified payment interface (“IPU“), cards and mobile wallets, which had fallen sharply in April 2020, have now been revived. This is mainly due to the increase in the number of consumers using contactless digital methods to pay utilities and other bills, the reopening of e-commerce services after the pan-India lockdown and a sudden surge in payments to over-the-top and edtech platforms.UPI itself processed around 1.23 billion transactions worth INR 2.41 lakh crore till June 28, 2020, which is recorded as the most valuable by the chain in a given month, according to the Reserve Bank of India (“RBI“).3
While traditional lenders have become risk averse during the current pandemic, Payment continues to expand its vertical lending services with the recent launch of a new microcredit service, “Paytm Postpaid”, for users transacting online for bills and everyday purchases and aims to leverage data from its users to determine those with good credit behavior. To enable this service, Paytm has partnered with Clix Capital and Arthimpact Digital loans, as well as several neighborhood stores and outlets.4
Separately, Payment also launched an INR 100 crore loyalty program to encourage partner merchants such as grocery stores to continue accepting digital payments through Paytm’s QR code. This program attempts to cover merchant discount rate fees incurred by merchants when transferring money from Paytm’s wallet to a bank account through a rewards-based points system.5
google announced that it will invest around $10 billion in India over the next 7 (seven) years through the “India Digitization Fund”. This funding aims to: (a) enable affordable access and information for Indians in various local languages such as Hindi, Tamil, Punjabi and others; (b) create new products and services tailored to India’s unique needs; (c) empower businesses in digital transformation; and (d) leveraging technology and artificial intelligence for social good, in areas such as health, education, agriculture and others.6 Google is also reportedly working with its partner financial institutions to launch a credit feature for small and medium businesses on its payment platform, Google Pay.7
5paisa.com has launched an AI-powered peer-to-peer lending platform, 5paisa Loans, which is designed to enable lending options ranging from INR 500 to INR 50 lakhs to multiple borrowers, and with earning potential up to 36% (thirty six percent) annual interest. The company proposes to alleviate the short-term cash needs of various borrowers while offering lenders the opportunity to monetize their idle money.8
Zaggera fintech start-up focused on assisting businesses and businesses with innovative technology solutions, has partnered with Visa to jointly develop payment solutions for small and medium-sized businesses that improve productivity, optimize costs and provide access to faster credit.9
Footnotes
1 https://www.livemint.com/news/inde/how-covid-19-has-changed-vc-investing-in-india-11592896613103.html
2 https://inc42.com/resources/the-shift-to-digital-payments-empowering-rural-businesses-to-make-transactions-seamless/
3 https://economictimes.indiatimes.com/industry/banking/finance/banking/digital-payments-bounce-back-to-pre-covid-levels/articleshow/76700360.cms?from=mdr
4 https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/paytm-deepens-micro-credit-foray-as-other-companies-shy-away/articleshow/76252832.cms
5 https://inc42.com/buzz/paytm-launches-inr-100-cr-loyalty-scheme-move-to-spur-upi-growth/
6 https://www.livemint.com/news/inde/google-launches-10-billion-digitization-fund-in-india-11594633925375.html
7 https://economictimes.indiatimes.com/small-biz/sme-sector/google-is-in-talks-to-launch-sme-lending-on-pay-platform/articleshow/76615624.cms
8 https://www.financialexpress.com/industry/banking-finance/5paisa-brokerage-launches-new-p2p-lending-platform/1959424/
9 https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/fintech-startup-zaggle-joins-hands-with-visa-to-launch-paymentsolutions-for-smes-startups/articleshow/75917620.cms
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Originally published August 14, 2020
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