The true enabler of India’s digital payments: Sarvatra Technologies and its EFT switch platform
There is no doubt that one of the biggest disruptors of the Indian fintech industry is the Unified Payments Interface (UPI) developed by the National Payments Corporation of India (NPCI). It allows the instant transfer of funds between bank accounts without having to enter account details each time. And vying for the largest share of the country’s Electronic Funds Transfer (EFT) market are startups like PayTM, PhonePe and Google’s Tez (now Google Pay).
Pune-based Sarvatra Technologies, founded in 2000, is playing a different game altogether. It is digitally-enabling banks to be part of the EFT wave by providing them with PaaS (Platform as a Service) solutions, which allow UPI and Immediate Payment Service (IMPS) transactions. At present, Sarvatra’s platforms handle more than 50 percent of all UPI transactions and 30 percent of all IMPS transactions carried out in India, says Mandar Agashe (49), Founder and Vice Chairman of Sarvatra Technologies.
The company’s payments platform ‘Sarvatra EFT Switch’, launched in 2010, is now India’s top EFT switch. It is offered as a PaaS, and holds 55 percent market share in NPCI’s sponsor model that includes more than 1.5 crore issued debit cards. However, the business was originally meant to bring underbanked people in semi-urban and rural areas at par with customers in urban India. With the digital explosion in the country, especially in rural areas, everything seems to be coming together at the right time for Sarvatra. Last year, the company clocked a turnover of Rs 70 crore and is showing no signs of slowing down.
“Our Gross Transaction Value for the financial year 2017-18 was Rs 27,000 crore and for the financial year 2018-19, we are set to touch Rs 40,000 crore with an average of Rs 3,300 crore per month,” Agashe says.
In an interaction with SMBStory, Mandar Agashe, Founder and Vice Chairman, Sarvatra Technologies, recounts his journey and explains his mantra for success.
SMBStory: Why did you start Sarvatra back in 2000?
Mandar Agashe: I come from a business family that has been closely associated with the co-operative sectors of Maharashtra, like sugar and banking, for three generations. My grandfather, Chandrashekhar Agashe, the founder of Brihans Group, was a visionary who gave a boost to the co-operative sector by forming the Brihan Maharashtra Sugar Syndicate way back in 1934.
When I finished my B.E. (Computers), I started Sarvatra because I wanted to bring the best of banking, which was available to urban customers, to the underbanked people in semi-urban and rural areas. Since cooperative banks were the only major banks serving the semi-urban and rural population, I decided to provide these co-operative banks modern technology at an affordable price and in a manner that they could easily use with minimal technical knowledge and manpower.
SMBS: How did you raise investments for such an ambitious project?
MA: To maintain the growth momentum and invest in newer opportunities, we raised funding from time to time by finding correct strategic partners, who not only gave us capital but brought with them technology and domain expertise, which is very important for a startup. i-Flex Solutions (now Oracle Financial Services Software Ltd.) was our first strategic partner to invest in us after evaluating the excellent software and support base of our company.
In the second round, we raised more capital from top class strategic partners like Vallabh Bhanshali (Chairman, ENAM Financial Group) and ICICI Bank. Overall, we have raised a total equity of more than $ 20 million from strategic investors over 10 years.
SMBS: How did the company diversify into different categories?
MA: Sarvatra’s focus, since its inception, has not only been to develop innovative banking products, switching and payment solutions that address the special requirements of the rural/co-operative banking sector, but also endeavouring to remove all budgetary, technological, operational and infrastructural impediments faced by the sector. Since co-operative banks were facing technological, manpower and infrastructural challenges on multiple fronts, it was only logical for Sarvatra to continuously develop and evolve new products and services to address all these challenges.
The semi-urban and rural end customers are already mobile savvy and can access the internet via mobile. Equipped with debit cards provided to them by us via their banks, they can now perform various digital transactions like merchant purchase, funds transfer and ecommerce using our platforms. As a result, today we are a leading end-to-end solution provider offering RuPay Debit cards, ATM, POS, ECOM, Micro ATM, IMPS, AEPS, UPI, BBPS and POS-based branch servicing solutions.
SMBS: How is Sarvatra different from its competition?
MA: The banks digitally enabled by Sarvatra on NPCI’s RuPay Payment Platform currently process over 3,00,000 transactions per day and the number is growing exponentially. In October 2018 alone, 10 million transactions for ATM, POS and ECOM with a total value of Rs 3,300 crore were managed on the Sarvatra EFT Switch platform.
Prior to the entry of Sarvatra Technologies, possessing world-class data centres and payment infrastructure was difficult for small rural and co-operative banks due to the huge capex involved in owning and managing it. Sarvatra provided the entire infrastructure required for a bank to centralise its system and to participate in the national payment network as a managed service. The entire setup is managed by Sarvatra, while the operating cost is on a pay-per-use basis. This enables even the smallest rural and co-operative bank to offer modern customer facilities with minimal expenditure and shortest time to go live.
SMBS: Considering the large scale of operations, what is Sarvatra’s impact on customers and society?
MA: The Sarvatra EFT Switch offers banks a new business paradigm for increasing efficiency and new revenue streams and thereby, the ability to compete with large banks and has become a driving force for financial inclusion in India. It has also made transactions easy for end customers. There are some interesting case studies showing our impact.
First, we enabled Samarth Sahakari Bank to provide an ATM van facility to pilgrims walking in the Dnyaneshwar Palkhi this year. More than 3,000 pilgrims availed this facility. As a result, the pilgrims were not required to keep cash with them and could withdraw and deposit cash as and when required.
Second, the newly formed Telangana State Co-operative Bank was looking for a common EFT switch platform that could quickly bring all of its nine district co-operative banks under NFS. Sarvatra provided 9,00,000 RuPay debit cards to the farmers banking with it, while deploying more than 1,000 Micro ATMs and 250 ATMs.
Third, Andaman and Nicobar State Co-operative Bank wanted to bring the local population on the RuPay network. Using existing infrastructure, Sarvatra created a robust platform with 24/7 availability. The locals could now use their debit cards in mainland India. Tourists could also use ATMs deployed on the islands.
SMBS: What are the challenges in sustaining and growing the business in such a dynamic marketplace?
MA: For us, the main challenge is to execute our future roadmap in a short span of time. In next five years, we see ourselves providing more digital payment platforms including UPI, AePS (Aadhaar Enabled Payment System), BBPS (Bharat Bill Payment System), thereby maintaining our role in the financial inclusion of the underbanked population of India.
In keeping with our philosophy, we also seek to solve the next impediment of our clients: a paucity of acquiring infrastructure in rural and semi-urban regions. Issuing debits cards to bank customers is all very well, but without a robust and ubiquitous acquiring infrastructure like Micro ATMs, Merchant POS terminals, ATMs, etc., neither banks nor their customers benefit much. We, therefore, envisage expanding of our operations by deploying acquiring infrastructure for the banks.
Further, Sarvatra EFT Switch is already deployed in more than 450 co-operative banks across 27 states and 3 union territories in India, but an equal number of banks are yet to come on the National Financial Switch (NFS) platform. Also, our current customer banks are yet to issue debit cards to 80 percent of their savings account customers, which is a huge potential for growth of transactions on our platform.
SMBS: What is your advice to people who want to set up their business in the same sector?
MA: Fintech is a fast growing field and will continue to grow for many years to come. It is important to create your own niche instead of just a me-too product. It also important to study and understand the regulatory environment and the government roadmap for fintech. Most importantly, it is important to have a good founding team committed to your mission, as fintech is a longterm commitment.
Also, for any startup or MSME, getting proper funding on time is critical and raising funding from time to time is as important as developing breakthrough products. I feel MSME creates the maximum innovation in almost every sector, especially fintech, which has the most startups that naturally fall under MSME category. What entrepreneurs can learn from me is that it is possible for an MSME to create a world-class product company in fintech.
SMBS: What is the way forward for Sarvatra?
MA: Going forward, we will be directly empowering the end-customer with user-friendly mobile payment apps, like UPI, AePS, BBPS, etc. We are already accelerating on this path and we already handle more than 50 percent UPI transactions and 30 percent IMPS transactions carried out nationally. In just one year, the country experienced a 2,000 percent increase in the number of UPI transactions, and an even greater increase in the monetary value of those transactions.
We envisage this exponential growth trend to continue in the coming months and years, even as we come out with new innovative technology products and services to make payment transactions easier.