To head towards that one goal of business – profits, every startup has to think up ways to monetize efficiently. For digital payments startups, especially for the ones keenly focussing on the merchant side of the business, credit as a monetization avenue really becomes the need of the hour.
One such startup – BharatPe – that is a digital payments platform and has a separate app for merchants, has also started providing credits to these merchants digitally.
It counts on interdependent cyclical relationship of credit and application usage to increase the revenue on its platform. How? More usage of digital payments meaning more scope for lending, and higher the need for credit more the usage of this applications.
This has been done keeping in mind that these unorganised small merchants find it difficult to procure loans from regular institutions, be it NBFCs or banks or others in the game.
The company that has onboarded with 7 lakh offline merchants on its platform till now has now partnered with NBFCs like Apollo Finvest to offer loans with ticket sizes between the range of Rs 10,000 to Rs 1 lakh at a minimum interest rate of 1.67%, lower than most in the industry.
The target is that at least 20-25% merchants on the platform use the credit services, making for a healthy, efficient, and successful revenue model.
Apart from monetization, this will also help the company in scaling up from the current figures of 10 million transactions worth $400 million altogether to the total payments on the platform reaching around a billion dollars, as co-founder of BharatPe Ashneer Grover told ET.
Given the importance of credit to merchants, BharatPe isn’t the only fish in the pond doing the business of lending to the merchants. Several others like Cars24, Flipkart, Ola and other pure-play fintech platforms are doing the same.
Two differentiators BharatPe is counting on to scale the business and credit facility in this highly competitive market is the separate focus on merchants via the BharatPe Merchant UPI platform powered by QR codes and the low-interest rate.