We recently wrote about how payment gateways are giving a bumpy ride to startups. There have been interesting trends arising in the form of a funding flurry in this sector and also a lot of service providers coming up. Here are some of the key takeaways from the previous article:
What reason would you attribute to the flurry of funding activity in this space?
Electronic payments in India is only about 5% of retail payments, while China is at about 35%. Over the course of the next decade, the retail electronic payments market is expected to grow 7X. Increasing penetration of the internet will help the cause. Further e-com is witnessing an unprecedented growth and market is expected to reach $ 50 Bn by 2015 and hence a need more and better payment gateways is a must.
What is the pain point in India that the new payment gateway companies should aim at focussing on?
Deploying electronic payments infrastructure in Tier 3-4 towns and villages in an affordable / viable manner is the problem being solved. This deployment effort requires innovation in business model and requires large investments. Further, electronic payments is still plagued by above average failure rates, high e-tailor online account processing time, high fixed costs for processing transactions etc. We believe that a company with a strong focus on technology innovation stands a good chance to address these issues.
How do you see the space evolving from here on in?
NPCI is starting to rollout RuPAY. Other similar trends are taking place which can usher disruptive changes in the payments space. Further, given the growth in e-com space we expect to see better technology addressing some of the pain points mentioned above. We believe multiple players will continue to focus on this space in the near future.