[The Turning Point] How B2B payments startup PayMate overcame strict regulations to please marquee investors
The Turning Point is a series of short articles that focuses on the moment when an entrepreneur hit upon their winning idea. Today, we look at B2B payments startup PayMate, which provides digital payments solutions for enterprises and SMEs.
Serial entrepreneur Ajay Adiseshann founded his first company WebResource, which was focussed on web development, in the late 1990s.
“At that time, the private telecom subscriber base was growing rapidly. Each operator had their own app store providing entertainment apps and tools, and we would partner with these telecom companies to provide apps," says Ajay.
Telecom operators also had their own billing platforms for various value-added services. Ajay says, “It then struck me if we could use mobile phones for making B2C payments or if money could be transferred from one subscriber to another”.
Thus, he conceptualised PayMate in 2006 to make mobile payments using basic telephone and technologies like ethernet.
Today, PayMate is a cloud-based B2B payments platform digitising the procurement-to-payment cycle for businesses. It helps large enterprises and SMEs transit from traditional to digital payments.
At present, PayMate claims to be processing over $5 billion annually. Backed by Mayfield Fund, Lightbox Ventures, and Mayfair 101, it recently raised $25 million from Visa and the Bennett Coleman & Co Ltd (BCCL).
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The winning pitch
Ajay first pitched his business idea to Kleiner Perkins, a US-based VC firm, in late 2006.
“I just gave the demo of how easily one could use a simple mobile phone to make payments and transfer money from one bank account to another, or to a merchant. It was no long-drawn presentation, I used no slides,” he says.
"A live demo is much more powerful than subjecting people to multiple painful slides," adds the founder.
Challenges on the way
In its initial years, PayMate allowed customers to use their mobile phones to shop online and make utility bill payments. With this, Ajay went on to acquire both online and offline customers.
But despite getting some prominent first customers such as CitiBank, Naukri, and JeevanSaathi.com, Ajay says, the journey was not all uphill.
“We were an unknown commodity. Going up to a bank, which had a list of compliances - just demonstrating the product and convincing them that this was secure was a challenge. We demonstrated our product to the banking partners and stakeholders that we had built an end-to-end and basic technology, which was a highly secure mobile payments platform,” says Ajay.
Apart from this, PayMate was also hit by a lot of regulations – wallet and mobile banking guidelines - since those were the early days for mobile financial services.
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Entering the B2B space
Ajay then came across business statements in the B2B industry. He found use cases in the cab and budget airline industry, and PayMate was soon adopted to make payments for car rental companies and corporates. PayMate switched to B2B payments in 2011.
“We got IndiGo on-board. Our platform optimised the payment between travel agents and IndiGo, thus lowering the costs as we created a direct product relationship network,” says Ajay.
Today, the company has created a niche in the supply chain management to smoothen the money flow, make easy GST payments, and tackle invoice issues.
In March this year, it announced its global expansion to 92 countries by collaborating with Visa. At present, it has over 40,000 registered businesses on its platform in India.
(Edited by Megha Reddy)
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