[Tech30] This finance exec’s startup fixes the last piece of the fintech jigsaw - recurring payments

In 2016, when payment gateways had just entered the Indian market, multiple legacy problems were being solved individually. But one issue that still needs solving is recurring payments. It is a challenge that is generally facilitated only by traditional players like financial services, mutual funds, and NBFCs.

But, Atma Krishna wanted to use tech to solve this particular industry problem. To do so, he founded LotusPay in June 2016, in a relatively less crowded market.

He tells YourStory, "It was a massive area, and the volumes were also going to be huge."

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The fintech startup helps businesses get better access to the NACH-NPCI payment system for recurring payments. It has a cloud-based solution for banks that is secure and scalable, which works for both eMandates and physical mandates.

Based in Bengaluru, LotusPay was a part of Y-Combinator 2017 Summer batch and raised $120,000 as part of the seed accelerator's standard deal. It later raised an undisclosed seed round in December that year from undisclosed investors.

At present, the startup has a team of 10 people. The core team works on engineering, operations, product, and customer support.

How does it work?

Atma Krishna was interested in financial technology well before he started LotusPay. The founder has a BSc in Management from the London School of Economics, and an MBA from the Indian School of Business.

He previously worked with the investment banking division at Barclays Capital in London. Later, he consulted with McKinsey and dealt with financial institutions in India like retail banks.

Deriving insights from these experiences, he envisioned a simple product that would work as a payment gateway for recurring payments.

Atma says that while businesses trust the banking system massively, banks are weak at design - the root linking transactions between the two parties. He decided to put these two together and figure out a way to make the payment experience hassle-free.

He explains, "We want to take this to all industries like healthcare, education, and even for something like a gym with better design and technology than what banks offer."

At present, LotusPay's product is powered by eNACH with a single integration capability. It helps multiple sponsor banks and makes NACH accessible to financial services and nascent users like tech companies, schools, gyms, and even resident-welfare associations (RWAs).

What is NACH? It is a thin layer of software that gives businesses better access to the bank payment system. LotusPay sits between these parties, with a specific focus on recurring payments for which NACH is tailormade.

Serving as a vendor to sponsor banks with single integration, the startup claims to be India’s first payment gateway for recurring payments powered by eNACH. With around 400 users on-board, its clients include Reliance Jio, IDFC First Bank, Aviva Life Insurance, and Pine labs.

The startup’s revenue model is synonymous with every other payment gateway. It has a purely transactional model, earning a fee out of every mandate and transaction.

Market landscape

According to GII Research, the payment gateway industry in India is expected to grow to $1,708 million in 2025 at a CAGR of 19.3 percent between 2018 and 2025.

Atma says that his competition is intense at the moment, from the likes of the well-established old school aggregators, new-age payment gateways, and the banks themselves. However, the entrepreneur believes that a singular focus on NACH will help it stay relevant.

He explains, "We are not trying to be everything. We do not sell things like UPI, credit cards or wallets. Gateway for recurring payments is a massive problem and we are trying to solve just that."

(Edited by Saheli Sen Gupta)

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YourStory’s Tech30 companies list is an annual selection of 30 carefully curated and disruptive tech-based startups that we believe will shape the new narrative for India and the world. To get a complete overview of the 2019 Tech30 companies list, download the Tech30 Report here.