How a move to the cloud propelled payments firm Pine Labs to near-unicorn level

How a move to the cloud propelled payments firm Pine Labs to near-unicorn level
Photo Credit: Shah Junaid/VCCircle
15 Mar, 2018

A retailer’s concern centres on customer experience, increasing sales and reducing costs. And, soon-to-be-unicorn Pine Labs Pvt. Ltd is delivering a seamless transaction to achieve just that.

The payment solutions company is revolutionising point-of-sale payments by replacing the standard card-centric device with a cloud-based, smart payments platform that is designed to reduce costs and drive revenue for retailers.

With a 16% market share of digital transactions at brick-and-mortar retail stores, it has also been among a handful of companies helping the government’s Digital India initiative with aplomb.

What’s more, Actis Capital’s and Altimeter Capital’s recent $82-million (Rs 530-crore) bet on Pine Labs, valuing the company at $900 million, now puts it in the coveted list of companies that are expected to enter the unicorn club this year.

Unicorn is an industry term for startups commanding a valuation of $1 billion or more. Oyo, BigBasket, Swiggy, Practo, Rivigo, Delhivery, BlackBuck and Freshworks are on the verge of making it to the elite club.

But unlike its soonicorn peers, Pine Labs, in the strictest sense, is not a startup. It has toiled hard for almost 20 years, going through a change in business model, ownership and management, to rediscover itself time and again.

Ever since it entered the payments space in 2009, the ecosystem has been disjointed and time-intensive, and required quick and seamless adaptation of a continuously evolving retail landscape. Today, Pine Labs has finally made the cut, and is looking to scale its operations to the next level with overseas expansion plans.

The company’s cloud-based payments solution allows merchants to accept both traditional electronic payment methods, such as credit or debit cards, besides e-wallets, QR code and UPI-based payments on a single platform.

Pine Labs also helps retailers in targeted customer-engagement campaigns, consumer analytics, and in-store consumer financing for partner brands, tailored to customer requirements at the point of sale.

Journey to Soonicorn

Established by Rajul Garg in 1998, the company initially focused on large scale smart card-based payment and loyalty solutions for Indian petro companies. When Garg exited the company in 2003, the incumbent CEO Lokvir Kapoor took over the reins of the company.

“Although the legal entity was existing before, nothing much was happening. The current form of Pine Labs began in 2004 when we started reaching out to banks, merchants and oil companies with a new set of products and services,” said Kapoor.

After the change in management, Pine Labs has been working mostly with oil companies, offering engineering and automation solutions for gas stations. However, the distinct shift in business model began five years later, around the same time when homegrown payments major PayTM launched its operations.

The company ventured into the mainstream payments space to provide solutions to merchants, connecting them to banks and other financial services. Pine Labs also secured its first venture capital investment from Sequoia Capital soon after that.

“The real payments journey started around 2009 and became the mainstay business for the company. We were able to offer a couple of very different kind of solutions for merchants that did not exist before. We were able to blend credit with payments, help sales promotions with an integrated network of partners, including retailers, brands and banks to promote specific products, and package these with specific credit offers for consumers,” Kapoor added.

Subsequently, the company was able to execute its plans in a seamless manner on a cloud-based platform to place a unique business proposition before retailers.


Pine Labs realised that merchants were looking at a solution that would help them improve their engagement with their customers during the payments process.

Slowly, the company developed greater levels of payment efficiency for retail merchants accepting digital transactions. It partnered with banks and payment aggregators so that its PoS terminals could process all forms of digital payments.

It also offered a host of software services around payments to help merchants promote their business. Now, it also offers services in credit delivery, loyalty programs, gift cards and data analytics.

“We offer a single interface, which can be used for acceptance of cards, wallets, UPI-based payments, NBFC transactions, deal-voucher companies, loyalty programs and gift cards. The cloud-based network allows us to incubate diverse types of payment players into one single interface for the merchants,” said Kapoor.

The company has a presence across 300,000 touchpoints across India and claims to process $15 billion of transactions every year.

“Merchants are overwhelmed by the diversity of payment instruments in the market and they want to make sure that they have the right partner who can help them work with all sorts of payment instruments. We offer the widest choice of payments instruments that can be accepted on a network.”

Global ambitions

In December 2017, Pine Labs entered Malaysia with an exclusive partnership with a leading bank. “We have set up the first subsidiary in Malaysia to partner with brands and merchants. We have a very strong response coming from West Asia and we are very close to signing and launching our services in the UAE,” Kapoor said.

The company is also exploring opportunities in other regions of Southeast Asia such as Indonesia, Philippines, and Thailand, and in Qatar and Saudi Arabia.

Targets, opportunities

According to VCCEdge, the data research platform of News Corp VCCircle, Pine Labs posted revenue of Rs 195 crore in 2016-17 from Rs 122 crore in the previous fiscal year. The company registered net profit of Rs 3.8 crore against a net loss of Rs 10.4 crore during the period under consideration.

Kapoor said the company is looking to grow at 60% year-on-year to close the year at Rs 300-400 crore. Pine Labs earns from every transaction processed on its platform, which accounts for 70% of its overall revenue, while the rest comes from other value-added support services.

According to Kapoor, overseas markets are more attractive as the penetration of digital transactions is much more, while India is still a predominantly cash market. “On a per unit basis, we expect our international businesses to be more profitable.”

“The penetration of digital transaction in India is limited at the moment. It is only 10%, while 90% is still in cash. However, in terms of the intensity of usage of digital payments as well as the footprint expansion, we think we have a great opportunity ahead of us,” he said.


Pine Labs is looking at potential acquisitions in the international markets, where it would look for attractive opportunities that can help it establish and scale faster.

“We would look into companies that can accelerate our entry into the market. It is a time consuming process to set up a network. We will have to work with different players, including banks, wallets, merchants and more. If there’s a company that can help us accelerate the process, that can be a good opportunity for us,” he said.

A B2C product in the making

Pine Labs is currently preparing to launch its first ever business-to-consumer product with gift cards.

“We have a prepaid payment instrument licence from the RBI. We are exploring opportunities in the gift card business. We work with well-known brands, so we would partner with them to push their gift cards to consumers. This opportunity looks very synergistic with the requirements of our merchants. The network and infrastructure is already in place,” Kapoor said.

However, Pine Labs currently has no plans to get into the wallets business.