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Infibeam swings to loss for April-June as MDR rule changes hurt
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Infibeam Avenues Ltd reported a net loss for the fiscal first quarter through June despite a rise in revenue, as the e-commerce and payment solutions company was weighed down by changes in rules governing merchant charges on debit card transactions.
The company, previously known as Infibeam Incorporation Ltd, said in a statement revenue rose 27% in April-June to Rs 91.3 crore from Rs 72.1 crore a year earlier. Infibeam attributed higher revenue to growth in both its e-commerce and payments businesses.
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The company said that its BuildaBazaar e-commerce solutions platform has 5 lakh merchants and that its payments platform processed transactions worth Rs 10,245 crore during the quarter. Also, the company has shifted its focus on payments and transaction-based revenue from the subscription-based revenue model for small businesses.
However, the company reported a net loss of Rs 13.9 crore for the quarter through June compared with a net profit of Rs 12.7 crore a year earlier. Total expenses jumped 56% to Rs 106.6 crore, as payment gateway processing charges soared 82% to Rs 75 crore.
The company attributed the loss to the zero merchant discount rate (MDR) mandated by the government on debit card transactions below Rs 2,000 and lack of clarity on reimbursement.
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The MDR is the fee that merchants pay banks for providing payment infrastructure such as point-of-sale terminals. Starting January this year, the government waived MDR charges on debit card transactions below Rs 2,000 for two years in an effort to boost digital payments and said it would reimburse the banks.
Vishal Mehta, managing director at Infibeam, said in the statement the company is focusing on increasing transaction processing volumes for its web services business. He added that the web services and payments businesses are growing rapidly due to overall growth in the Indian e-commerce market and overseas expansion.
In May, Infibeam had acquired digital payments processing company Vavian International Ltd to expand operations in the Middle East. It is also closing the acquisition of Snapdeal’s warehousing and logistics business Unicommerce.
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