Mswipe bags $31M in Series D funding, Axis Bank sells off 8pc stake in firm

Independent point-of-sale (PoS) merchant acquirer and network solutions provider Mswipe on Wednesday announced raising Series D funding of $31 million. UC-RNT fund, a joint venture between Ratan Tata’s RNT Associates and the University of California, along with existing investors Matrix Partners India, Falcon Edge Capital, and DSG Consumer Partners participated in the round.

According to a press statement, the company plans to use the funds to develop the largest network of merchants accepting digital payments in the country.

Mswipe at a glance

At present, Mswipe claims to have a payment network reach of 2,46,000 terminals spread across more than 550 cities, with close to 80 percent of the customer base consisting of SME merchants typically supported by 1–30 employees.

Further, according to the firm, the turnover of these outlets is in the range of Rs 1 to 5 lakh a month, with most of them accepting credit and debit card payments for the first time through Mswipe.

The annualised value of total transactions enabled by Mswipe across its network stands at Rs 9,560 crore.

Last year alone, the transaction value on the Mswipe network grew four times while the number of installations grew threefold.

Just last month, Mswipe acquired PayU’s offline PoS division. Mswipe also launched BharatQR and UPI acceptance for building its open digital payment capabilities as a platform.

Speaking about the funding, Manish Patel, Founder and CEO, Mswipe, said, 

“With merchants of all sizes actively looking to enable digital payment acceptance at their establishments, we expect to grow exponentially going ahead, create card and electronic payment acceptance infrastructure across cities, and widen our user base.”

Further, speaking about the utilisation of funds, Manish commented,

“Merchants across the board are now looking to streamline and automate processes. At Mswipe, we are working towards developing the next generation of Android-based smart PoS terminals that will offer merchants capabilities like GST-compliant billing and inventory management with integrated and seamless payment acceptance on the same device.”

“Merchants can further develop customised Android applications and easily integrate Mswipe’s payment platform with such apps using these smart PoS terminals, all while ensuring the same level of security and trust for the customers,” he added.

Vikram Vaidyanathan, Managing Director, Matrix India, said,

“Mswipe is the ‘universal acceptance’ solution for all merchants, enabling them to accept any payment instrument— cards, wallets, UPI, NFC, etc. In a rapidly changing payments landscape, Mswipe’s open technology platform and ability to deliver solutions at the lowest cost sets them apart. We are privileged to partner with Manish and team on their journey to create India’s largest digital acceptance network.”

In a separate announcement, Axis Bank stated in a stock-exchange filing that it has sold its entire eight percent stake in Mswipe for Rs 80.94 crore ($12.5 million).

However, the bank didn’t specify the name of the buyer.

Last July, the firm closed Series C funding of $25 million, getting new investors including Falcon Edge Capital, Ola Cabs, and Meru Capital. 

PoS, a sustainable business?

According to the RBI, as of April 2017, there were close to 2.6 million PoS devices deployed and a total of 375 million transactions taking place across debit and credit cards.

However, that doesn’t still rule out the strong competition and threat which open-ended systems like UPI bring to the ecosystem, with government initiatives like BHIM and Aadhaar Pay trying to disrupt the customer experience entirely.

In an earlier interaction, Abhijit Bose, Co-founder and CEO of PoS and payments services company Ezetap, had hinted that the revenue generators for future PoS providers will be in owning the software or the network on which the payments are facilitated.

Last December, Manish had stated that PoS systems aren't an acquirer-friendly business since the operational costs are higher. [Read here]

He stated that there is no scope for further innovation in the business. The cost of plastic and hardware can’t be reduced beyond a certain point. And if one needs to make money, they need to be profitable at per-transaction and per-terminal basis.

Hence, diversification of offerings to build full-stack solutions like providing automation of inventory and tallying of books, apart from just payments, seems like an obvious move by these operators.

This is one of the possible ways for these businesses to be profitable on a per-transaction basis.