This piece was posted in money control and is a brief contrast in comparable financial performances of some of India’s payments fintechs, specifically having to do with B2B and B2C models. The author indicates that B2B payments models might take a bit longer to ramp up, but have been doing comparatively better through the upheaval of 2020.
‘B2B payment companies such as Billdesk, Cashfree, Razorpay and PayU India scripted a solid FY20 performance, recording strong revenue growth while posting a profit or keeping losses within control. They are a sharp contrast to consumer facing payment entities such as Paytm and PhonePe, which are still haemorrhaging’
One B2B example given is CashFree, a 2015 startup based in Bangalore that enables businesses in India to collect payments online and make payouts. The author claims that CashFree made a profit of Rs 17 crore in 2020 (USD $2 million).
Contrast that with PhonePe, a highly funded 2015 startup phone app that was acquired by Flipcart, an e-commerce marketplace now owned by Walmart. The company is PhonePe is a mobile payments app that allows users to transfer money instantly to anyone, by using just their mobile number (think Zelle). The author also claims that PhonePe lost Rs 1,772 crore last year (USD 243 million).
The article offers some other examples and goes into some reasons for this general disparity.
‘“B2B has seen a lot more conceptual play than B2C. Conceptual players in the B2B space have built a DNA for innovation. While they take more time to get scale, they will generate huge amounts of cash as is happening with companies such as BillDesk,” said Rajeev Agrawal, Chief Executive Officer, Innoviti Payments, a Bengaluru-based digital payments company….Consumer-facing apps mostly work on valuations built on future business potential and prospects. Industry insiders pointed out that Paytm, which was last valued at $16 billion, got the valuation as a digital payments leader in India, transforming how a country of a billion-plus people pay each other.’
The last thought is how 2021-22 will result in some valuation corrections. A quick read for those that have interest in the India payments and fintech market.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group