Established in 2006, payments company ItzCash broke even for the first time in the latter half of the previous financial year. The company has experienced success in its cards and wallet businesses, and is now looking to scale up its presence in new segments such as assisted e-commerce services and fintech solutions for other players in the financial services space.
ItzCash now expects to report a profit for the current financial year, managing director Naveen Surya told FE. In an interview with Pranay Lakshminarasimhan, Surya talked about the impact of NPCI’s Unified Payments Interface (UPI) on digital wallet companies and other players in the payments space. ItzCash plans to tap other opportunities in the financial services space and enter the international remittances market. Excerpts…
What do you think will happen to wallets once UPI is made available to the public and starts gaining popularity?
See, UPI is one more interface, let’s start looking at it that way. And all these are products that can work through UPI, just like IMPS (Immediate Payment Service). UPI is that sort of an interface; it’s a simplified interface. What used to happen is say I have a wallet and I want to send money to someone. Today I have to write his name, IFSC code, bank account number, etc.
Going ahead, wallets are anyway going to be a part of UPI, just like they became a part of IMPS. So assume now we have a wallet with the same customer and we add a UPI interface there. What UPI interface does is that it allows me and the beneficiary to pre-set our details and preferences with any UPI application that I like. So it is an enhancement of the existing infrastructure to simplify the process of transferring funds from one person to another.
Even if wallets become a part of UPI, why would a user want to transact through a wallet when UPI is directly available to him/her?
The question exists even now. Why would a user want to use a wallet today? The reasons are different for different people. One of the most common reasons is convenience, which comes through the second factor, relaxation. Second is incentive. You might have a credit card but you might still want to use a wallet because it is giving some kind of an offer like say 20% discount.
Now look at this. Today UPI is able to cater to people who are savvy enough to use digital banking avenues. The people who are still using physical cash need to start using this kind of an interface to transact. And core banking is expensive and has not seen a huge volume of transactions. Look at your savings account passbook and you will find that. Even if it is your most active account, total transactions done through the account would not be in excess of 100 a month. On the other hand, in your payments account, you might have that many transactions in a week. For payments, you need an interface that is lighter, faster, and something that people can use even if they do not have a bank account.
What are you looking to work on next?
Firstly, we will continue pursuing digital payments. Most of these e-retailers are restricted today in terms of potential customers to the top 5-10% of the population. We are trying to unlock the next 30-40% for them. If there are certain PIN codes they are not covering, our outlets can act as alternatives because they are anyway situated in areas where these people live. Customers can come and pick up their stuff from our outlets. We are currently working on this with a lot of of e-retailers.
Second is of course, retail payment with our cards and wallet. On the remittances side, while we continue to do domestic remittances, we are now entering the international remittances space with tie-ups with Thomas Cook, Money Gram and Express Money. In India, among the players in the international money transfer space, only Western Union has a large network of touch points. So we are leveraging our presence in these areas and make our outlets touch points for sending and receiving money from abroad. We are basically entering the international money transfer segment and this is what we will be expanding this year.
Are you looking to tap other opportunities in the financial services space?
Absolutely. We are now partnering with various insurance companies because many of our customers do not have adequate insurance products. So these firms will cross sell those insurance products. Another thing that we are doing is helping mid-sized and large banks manage their payments businesses or manage their technology for payments. This year onward, we are ramping up our fintech solutions business, where we will be leveraging IT assets and our knowledge. And in that business, we don’t have to restrict ourselves to the domestic market, we can leverage our resources globally.