A world without cash:Venture capitalists investheavily in e-payment space
A combination of positive regulatory intent and growing market demand is leading to a burst of entrepreneurial activity in the country’s electronic payments sector. A number of new ventures offering innovative cashless payment methods are coming up as investors step up to fund and support them.
“The growth potential is huge as India is a cash-based economy. But what has really helped is the government’s rapid shift towards digital payments,” said Satyen Kothari, co-founder of Citrus Pay, who returned from Silicon Valley to set up the online payments solutions company in 2011. Earlier this month global venture firm Sequoia Capital disclosed its investment of $2 million (Rs 11 crore) in the Mumbai-based company.
In a document released last year, the central bank spelt out its vision for an electronic payments system and clarified that it would actively monitor governance of payment solutions companies, previously the responsibility of commercial banks.
“RBI is taking a balanced approach to push electronic transactions and addressing key risks to avoid frauds,” said Mohit Bhatnagar a managing director at Sequoia Capital, which has also funded Chennai-based Prizm Payments and Zaakpay in Delhi. In the past year, nearly half a dozen payment technology ventures have raised risk capitalf Sunding as overall industry sentiment turns positive on a sector where demand is growing fast.
Customers wary of using cards online can now pay by card-ondelivery. Mswipe, which claims to reach over 4000 merchants, raised a first round of funding from Matrix Partners earlier in January. Another Sequoia Capital portfolio company Prizm Payments has also launched a card-on-delivery product Swipeon last year. Other venture capital funds that have backed payment solutions companies include Gray Ghost Ventures, which invested $10 million in Delhi-based mobile payment startup Beam Money.