Mumbai-based mobile point of sales (PoS) payment services provider Mswipe Technologies Pvt Ltd has just closed its Series B round of funding, led by existing investor Matrix Partners. Another existing shareholder Axis Bank also invested afresh while DSG Consumer Partners came in as a new shareholder. With offices in Delhi, Mumbai and Hyderabad, the firm is now looking to aggressively expand domestically and aims to grow its merchant partnership more than eight times by December. In an interview with Techcircle.in, Mswipe's founder and managing director Manish Patel talks about the recent fundraising, growth & expansion plans, and the mobile payments market in India. Here are the edited excerpts.
We understand that you had also received investment term sheets from some other leading VC firms. Why did you decide to go with existing investors for the fresh funding? What are your plans with the capital?
Well, our current investors were very happy with the progress that we have made so far. So, it was fair on our part to give them a chance to continue to invest in our company. The investment by DSG Consumer Partners came through one of our angel investors.
The capital will be used to expand our merchant aggregator business and acquire new customers. Currently, SMEs have relationship with various banks and we want to provide merchant acquiring services to these SMEs. So a part of the money will go towards providing merchant acquiring services to these businesses without affecting their relationship with the banks.
Last time we spoke you told us Mswipe had around 4,000 merchants signed up and was adding 1,500 merchants a month. Has this monthly addition number changed?
No; this number by and large remains the same. The reason is that in October last year, the Reserve Bank of India had mandated that all installed PoS terminals in the country must be replaced with EVM (Europay, MasterCard and Visa)-compliant mobile PoS solutions. We were a little behind the schedule on getting this done. However, we managed to get all the necessary approvals for the same and launched India's first EMV-compliant solution, called Wisepad, in December. Wisepad is a Bluetooth-enabled device that does not require any physical connection to the phone. Using Wisepad, merchants can accept credit and debit cards with the same security and speed as conventional POS terminals at a very affordable price point and competitive card interchange fees. Currently, we are completing the process of replacing the terminals with our current merchants.
As of now, we have more than 6,000 merchants on board. We will keep adding around 1,500 merchants per month for the next couple of months. Hopefully, this number will go up significantly after that period. We will now look to reach the 50,000-mark by the end of this calendar year.
There are a bunch of existing and new players who offer mobile app-based payments solutions. Don't you think it is time to look at this segment, given the growing number of smartphone penetration in India?
As of now, we don't have any plans to foray into this segment. There are two reasons for it. One is that the market is not ready for it yet. You can create a mobile wallet or can link your app to a card on the cloud. The problem here is that it requires one to build huge infrastructure to be able to do it. Secondly, you are trying to change the consumer behaviour by launching new technology. We know that Nokia tried Nokia Money and Airtel launched Airtel Money a few years ago. But, the main utility of such services has been restricted to remittances. In my view, you cannot change the customer behaviour overnight.
Today, there are 314 million card holders in the country. As a consumer, I find it convenient to carry five cards in my wallet, using which I can swipe at merchant outlets and withdraw money from ATMs. There is no inconvenience as a user. Again it is very difficult to change consumer behaviour.
There are some similar players who are offering mobile PoS terminals. How do you look at the competition?
It is true that there are many PoS terminal providers. However, these firms are providing just the hardware, whereas we provide complete end-to-end solutions. Today, there are conventional PoS terminal solutions firms which sell hardware to merchants or banks. Now, that hardware needs to have a complete ecosystem in terms of merchant management system. No company provides this.
Even on the hardware front, there is no completion. The only credible competition is from Ezetap, but it is essentially providing a class of solutions that cannot be compared with Mswipe. They still provide an audio jack device that has no display, and it is not very convenient for a chip-and-pin transaction.
What are your revenue channels? How much revenue did you clock in the last fiscal? What per cent of the overall revenue come from the Indian operations?
Mainly, we bank on three revenue models—merchant acquiring business where we sign on merchants; provide the entire solutions to banks which can provide solutions to their merchants; and international licensing business.
We are not allowed to disclose the revenue details. All I can tell you is that our services revenues grew almost 2X year on year. India is our key market and it will remain the same. India contributes almost 80-85 per cent to the overall revenues. The rest comes from Sri Lanka and Bangladesh. Since we don't have competition in Sri Lanka, we will aggressively look at this market, going forward.
Till when will the fund raised from this round last? When will you look at Series C funding?
I hope that the current funding will last for the next 24 months. Hopefully, we will look at the same set of investors (Matrix Partners and Axis Bank) to raise fresh funding.