After its success in payments, fintech startup Juspay is all set to build credit infrastructure rails

Decade-old fintech startup Juspay wants to bring in lenders across risk appetites and sizes by building a credit ecosystem. Having raised $60 million in its recent funding round from SoftBank and others, it now aims to replicate its success with payment infrastructure. 

“Similar to payments, credit too experiences dropouts and the problem of distribution and analytics. Juspay offers access to a large merchant base to the lenders. We will also provide them repayment and data innovation to offer small ticket-size loans in real-time,” Vimal Kumar, Founder and CEO of Juspay, tells Yourstory.

He adds that the idea is to enable lenders targeting different groups to provide credit to more credit-worthy people through Juspay’s network of merchants. This also ties in with the company’s vision of paying back to the ecosystem by building the credit infrastructure rails for the country. 

Founded by Vimal and Ramanathan RV, Juspay has come a long way. Last January, Ramanathan RV moved on from his role at Juspay to set up Hyperface.co, a startup that issues co-branded credit cards and offers white labelled Buy Now Pay Later (BNPL) stack to companies.

Product journey

In 2012, Juspay started with its first offering, Card Vault, a product to store user card details for easier transactions. As part of the Reserve Bank of India’s (RBI) card tokenisation rules which came into effect on January 1, 2022, Juspay has moved the service to tokenisation. 

In August 2020, the stored card information database with Juspay was compromised as the company was a victim of a cyberattack. This led to the leak of user metadata of 35 million customers during the breach.

At the time, Juspay said that the breach had occurred when an old unrecycled AWS access key was exploited, enabling unauthorized access.

Soon after, the RBI came out with the mandate for tokenisation of customer credit cards in January 2021 after reports on breach of customer data at other companies including ClickIndia and Chqbook followed. 

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Juspay also offers payment SDK under the brand Juspay Safe, which was first launched in 2014. The feature solves for two-factor authentication (2FA) through device-based authentication, bank authentication, auto-reading OTP, and others, providing a single click payment option.

It runs the payment pages for top companies such as Bigbasket and Ola on the Software-as-a-Service (SaaS) model. 

“We have a micro app platform, which is embeddable into other apps. Typically, when you need to embed software in the apps, it takes two to three months. With our technology, however, we can push updates in minutes, conduct A/B user testing, etc.,” says Vimal.

Juspay has also built infrastructure solutions such as UPI-on-cloud and other stacks for customers, including UPI-in-app experience for Cred, UPI Autopay, UPI Reconciliation and Settlements, among others.

Going ahead, Juspay wants to build similar infrastructure rails for lenders, who can offer credit seamlessly.

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Ecosystem play

In 2016, Juspay built out BHIM, the UPI-based transaction app owned by NPCI, which is interoperable with other third party UPI apps and bank accounts. It also built the UPI Common Library as a vendor to NPCI. 

The UPI Common Library is embedded in the customer-facing app by a Payment Service Provider (PSP) and securely collects the user credentials. The PSP cannot store the customer’s encrypted credentials in any form.

Vimal says that building these features for the NPCI was a part of the company’s ecosystem play.

“We tried building something like the UPI in 2013 and failed. We were a small team and it was difficult to move banks to adopt an intermediate software for bank-to-bank transactions,” he adds. 

He recalls that a chance meeting in 2015 with Pramod Varma, who served as the chief architect of Aadhaar and India Stack, and a volunteer with iSPIRT at their investor’s office got Juspay to collaborate on building UPI and later BHIM. 

Vimal adds that a team of 50-100 people at Juspay are working on what he calls the ‘ecosystem efforts’ to build the credit rails at Juspay. The startup has also been working on developing OCEN — Open Credit Enablement Network. Launched by India Stack in July 2020, OCEN is aimed at a wider distribution of credit and will provide a credit protocol infrastructure to serve as a middle layer between lenders and digital platforms.

Juspay’s team working on ecosystem efforts is looking to provide account aggregator API for Loan Service Providers (LSPs) to capture the borrower’s data securely.

“We would like to work with banks, NBFCs, startups, and aggregate the best experience for our end-user through our merchants. In a way, we are building a sophisticated marketplace for credit through our platform,” said Vimal.

Business plans

For a 10-year-old startup, Juspay has raised $87.6 million so far – a far cry from other fintech counterparts. It claims to be EBITDA positive for now, looking to invest in its payment and credit products, as well as ecosystem efforts.

According to Juspay’s annual returns with the Registrar of Companies for FY 2019-20, it has incurred losses of Rs 420.3 lakh after taxation. 

“For us, $60 million is a large amount as we are a very capital efficient company. During our discussion with SoftBank and other investors, we realised that a lot of Indian innovation in payments and fintech is relevant globally,” says Vimal, adding that the company planned on expanding its operations to the US, Europe, and the Middle East. 

Juspay is also looking at increasing its headcount from 600 employees at present to nearly 1,000 in India over the next two quarters. The startup will continue to focus on enterprise and mid-sized merchants which aggregate smaller customers. It currently works with 230 merchants. 

“Our GMV stands at $50 billion on an annualised basis and close to 11 million transactions per day,” says Vimal. With SoftBank by its side, Juspay also plans on expanding its payments SaaS platform with its growing merchant base.