Reports on Monday suggested that e-commerce firm Infibeam will invest Rs 45 crore in payment gateway CCAvenue.
They added that Infibeam has signed a term sheet to invest the amount in Avenues India Pvt Ltd, and is looking to sign a definitive agreement with the payment gateway. In a BSE notification, Infibeam stated that its wholly owned subsidiary, NSI Infinium Global Pvt Ltd., has signed the term sheet and will be taking the investment forward.
NSI Infinium Global Pvt Ltd. operates e-commerce marketplace Infibeam.com and do-it-yourself e-commerce platform BuildaBazaar. While the percentage of the investment will be finalised in the definitive agreement, for Infibeam, this looks like a strategic investment. Reports suggest that through the investment, CCAvenue’s payment solutions will be deeply integrated to both the e-commerce marketplace and merchant store.
In a statement, Infibeam said,
Under the business model of e-commerce, the role of payment processor is very crucial in completing the financial transactions after the purchase is made by the customer. The payment integration is a very critical/equally important for the merchant in expanding his merchandise which on the other hand results into higher sales. The advantage to Infibeam would be in form of incremental revenue by way of deep integration for customers shopping on BuildaBazaar merchant store and also on Infibeam.com.
This is not the first partnership both entities are getting into. Back in August 2013, Infibeam’s BuildaBazaar had launched marketplace Dhamaal.com, with Infibeam owning 49.9 percent stake in the venture, and the rest (50.1 percent) being owned by Avenues India.
In July 2015, Infibeam was the first Indian e-commerce business to file for an IPO. In March 2016, Infibeam’s IPO had a rocky start, but was fully subscribed on the third and final day. It was oversubscribed by 1.1 times- the retail and non-institutional investors had oversubscribed the stock 1.31 and 2.23 times respectively. However, qualified institutional buyers gave the stock a muted response.
In his endeavour to take on the giants (Amazon, Flipkart, Snapdeal), the IPO was Infibeam founder Vishal Mehta's hope to raise the required capital and use the proceedings to build the business.
It was reported that the company will use the proceeds from the IPO to expand its consumer play, which constitutes 72 percent of its business. Further, in April, Next Orbit Ventures invested Rs 115 crore in Infibeam as a part of their IPO, picking five percent stake in the company. It was then said that Infibeam will use the funds to expand its business, set up a cloud data centre, 57 additional logistics centres, and purchase software and property.
On the other hand, CCAvenue has partnered with Freecharge, to provide customer access to over a lakh merchants on its payment gateway. Also, it partnered with LendingKart to launch CCAvenue Finance, a platform that allows merchants and consumers of CCAvenue seek financial assistance.
The e-commerce world has been witness to several e-commerce and payment solution integrations. Globally, there is PayPal and eBay, while in India there is Paytm, which has its e-commerce marketplace and mobile wallet all integrated. There is also Snapdeal, which acquired Freecharge last year and is rolling out several digital payment solutions on the go; and Amazon, which had acquired Noida-based online payment processor Emvantage for building India-specific payment products.
Integration of payment gateways with e-commerce marketplaces not just assures a degree of reduced friction with payments, what with the highest dropout rates, but it also attracts an additional user base, giving incentives to users of either company to use the other's entity (wallets to use e-commerce or vice versa).