“We just launched our 100 cities. The experience has been great from the point of view that the merchant onboarding has been a breeze. It has been far better than what our experience was two years back in the first 30 cities. The number of transactions per merchant as well as the value of transactions is also not significantly different from what we witnessed in the top 30 cities,” Suhail Sameer, Group President, BharatPe said in an exclusive interaction with ET Rise.
Some of the cities where they have recently expanded include Guwahati, Vellore, Hosur, Nagpur, Raipur, Bilaspur, Kochi, Trivandrum, Pondicherry, Coimbatore, Gorakhpur, Mathura and Nainital. In 2020, the company saw a much higher adoption of digital payments in Tier 2 and beyond in the aftermath of the virus outbreak. While its UPI QR payment acceptance grew by close to 130% in Tier 1 cities, it grew by 236% in Tier 2 markets during February-November 2020.
Eventually, the company plans to expand its presence to 300 cities by March 2023. “We would have always thought of expanding. But would have not gone as aggressive. There are a number of reasons for this – firstly a lot of lending requirements came up. Secondly there is a growing acceptance of digital payments now. It started with consumers not wanting to touch cash or credit and asking for digital payments. This has very quickly moved on to merchants also realising that this is a consumer need and actually very efficient,” he adds.
Sameer highlights some interesting trends that they witnessed since the pandemic time. Digital transactions in Tier 1 cities, for instance, that they were doing for existing merchants pre-Covid and post-Covid became 3x and the value of transactions went up 4x. “This just means that a lot of cash and potentially some part of credit/debit has moved to UPI. So in all my Tier 1 cities unilaterally, I don’t think there is any city that is operating at less than 2.5 times of what we were in Feb last year. The value of each individual transaction has gone up. There has also been a reasonable shift of high value transactions landing on UPI. The average ticket size of a transaction is now 60% up,” he reveals.
Besides this, the fintech player also observed that different lending requirements came up as being more prominent and popular during this time. Requirements for short term credit went up significantly, with people wanting working capital loans to get the business going. Long term loans, on the other hand, reduced from before. “People are credit starved and they need credit to get the business going again. Moreover, a lot of banks and NBFCs have become conservative coming out of Covid so the external supply is a bit constrained. As far as long term loans are concerned, everyone right now is just trying to get back on their feet and hence second shop expansion loans are less relevant. A first time loan seeker asking for a 12 month loan is lesser now compared to 12 months back,” he elucidates.
The company offers loans in the range of Rs 10,000 to Rs 7 lakh for a time frame of 12 months. It has given loans to more than 1.1 lakh merchants in 100 cities since its launch and aims to enable credit to 10 lakh small merchants, kirana store owners and SMEs in FY22.
Going forward, the company’s vision is to become a digital bank for SMEs. “We don’t want to do consumer credit. We want to be a bank for merchants and SMEs who are typically starved of banking services. Our learnings from the retail and merchant side have been great and we want to get more SMEs into the mix,” highlights Sameer.
He is bullish about the times ahead saying that the next 12 months will be great with ‘revenge buying’ trends also showing more momentum.
While the top 30 cities account for 85% of their business currently, Sameer is confident that Tier 2 and 3 cities will pick up further pace in the coming time. “I am anticipating it will be a 50-50 percentage in the next 18 months, going by the increased acceptance that we have seen,” he adds.
BharatPe’s lending product allows creditworthy SME merchants to avail loans via a 100% digital and automated process. So the merchant does not have to submit physical documents or invest additional time in extensive paperwork. It has committed to disburse $700 million of loans to small merchants and kirana store owners by March 2023.