SBI invests in Y Combinator-backed fintech startup Cashfree

India's largest lender State Bank of India has invested an undisclosed amount in homegrown digital payments and banking tech company, Cashfree, the Bengaluru-based startup said on Monday.

The investment will help Cashfree focus on its growth strategy of improving customer experience on digital payments platform, as well as encourage more product innovation, it said.

The PayPal-incubated startup processes transactions worth nearly $20 billion, annually, in India. It also has a huge presence in eight other countries, including the US, Canada, the UAE, among others.

"The investment from India’s largest bank shows its trust in Cashfree’s innovation and the way we are rapidly scaling up the payments business. This also underscores Cashfree’s role towards building a payments ecosystem that enables the fastest and easiest way to collect payments and make payouts for growing businesses," Akash Sinha, Co-founder and CEO of Cashfree said in a press statement.

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Digital payment companies, as well as tech startups that help build these platforms, in recent times, have seen a huge jump in traction. A spike in ecommerce and online shopping has forced people to use online tools to make payments, and digital payments, as a result, have quickly gained ground.

While most of the early traction came from metropolitan areas, users from lower-tier cities and rural India are quickly getting online too, and using digital payment tools to shop, settle dues such as EMIs, buy insurance, and even borrow money.

Cashfree, which powers over one lakh Indian businesses including Zomato, Nykaa, CRED, Acko, Delhivery, and Shell, says it leverages technology to lead payment disbursals in India with more than 50 percent market share among payment processors.

In FY20, the startup processed transactions worth $12 billion, up 25 percent on a month-on-month basis. It expects to hit $30 billion by the end of FY21, the startup's founders told YourStory in a recent interview.

Cashfree's investors include Y Combinator, and Apis Partners, among others.