India market: An annual opportunity of more than $500 Billion

In a chat with VARINDIA, Rajeev Agrawal, MD, Founder & CEO of Innoviti, discusses about the company, its offerings, technology, strategy and roadmap of the company

Give us a brief about Innoviti.

Innoviti Payment Solutions Pvt. Ltd has been a pioneer in the use of technology to help businesses across the retail supply chain to better organize the flow of money in their business operating cycles. Using its indigenously developed technology and constant innovation, Innoviti has delivered differentiated solutions for digital payments acceptance, consumer credit distribution and SME lending that have become benchmarks in their respective markets.

Kindly explain about the offerings, especially smelending.com.

uniPAY Next is a cashless payment acceptance/ automation solution for retail merchants, which includes modules for enabling merchant to provide consumer credit via EMI card payment options.

It allows merchants to conveniently and efficiently offer their customers a flexible variety of payment modes through a single uniPAY Next POS terminal – such as credit/debit cards, mobile wallets, UPI-payment apps, loyalty points redemption, employee benefit card redemptions, and more.

Backed by Innoviti’s proprietary #LookAhead technology, uniPAY Next brings a unique combination of speed and reliability to the merchant’s payment processing operations. Typically, Innoviti POS terminals deliver payment processing reliability of more than 96% vs the industry average at ~80%. Transaction processing time has typically been brought down to an average of ~3 seconds (vs industry averages at 7-8 seconds), thus delivering a superior experience to the customer. This has enhanced operational speed and reliability builds confidence in digital payments with both the merchant and his end consumer.

The uniPAY Next platform’s superior operating performance has driven rapid market acceptance with Innoviti today processing >US$3 billion in annual transaction volume across 50,000+ POS terminals. Innoviti grew 100% in transaction processing volumes last year against national average of 55%. Volume processed per terminal in Innoviti’s portfolio is 1.7X of India’s national average – a demonstration of the superior quality of the solution.

smelending.com is trade credit lending platform targeted at small retail businesses/dealers who have a currently unmet need for a reliable source of regular working capital financing. Typically, such “Dealers” form the last-mile distribution network for large manufacturers/ “Principals”, and need such working capital financing to manage their cash position during their trade cycle, i.e. the intervening period between sourcing one order from their Principal and then selling it off to finance the next order. Typical working capital loan requirements for such a Dealer are relatively low ticket size (Rs.15k – Rs.2 lakh), relatively frequent (2-4 orders every month) and relatively short-term (15-60 day tenure).

Using technology to automate all aspects of the lending process, the smelending.com platform enables loans as small as Rs.30,000 for periods as short as 15 days. Designed as an asset light platform, smelending.com connects lenders to small businesses as well as their principal suppliers, enabling the processing of more than 150,000 loans annually for over 30,000 such small businesses.

How are you leveraging technology to enable your customers?

On the payment processing side, Innoviti has several recent technology firsts to its credit. These includes a) the launch of faster contactless card acceptance for the first time in multiplexes, b) launch of dynamic-QR code base UPI acceptance in offline retail through its UPI@POS solution in collaboration with NPCI, and c) its propriety #LookAhead technology which provide faster, more reliable and lower-cost payment processing to merchants struggling with store and bank network failures.

With #LookAhead, uniPAY Next terminals are able to dynamically balance between competing merchant goals of ensuring least processing cost while maintaining maximum transaction processing relaiblity – referred to as LCMRR (Least Cost – Maximum Reliability Routing) of payment transactions. This ensures that each payment transaction is dynamically routed through the optimal cost/reliability route from amongst all the available acquiring Bank networks – via a Rules-based routing engine that dynamically “looks ahead” for identifying optimal network.

On the SME lending side, in contrast to the conventional 2-player (Lender-Dealer) lending scenario, Smelending.com uses its proprietary 3-player (Lender-Dealer-Principal) model along with underlying platform technology and operational processes to significantly lower both the perceived credit risk for potential lenders as well as their end-to-end operational cost overhead. This is achieved by a combination of:

* enabling seamless digital collection and transfer of non-traditional credit evaluation data like a Dealer’s past business history with his Principal, to prospective lenders,

* aggregating credit operations processes like dealer enrolment, loan origination, loan disbursement and receivables collection across multiple Lenders, thus avoiding unnecessary cost duplication

* digitizing key operational process like dealer enrolment and loan origination/disbursement via handheld mobile apps, thus reducing operational costs

This infuses the much-needed business viability for potential lenders like banks/NBFCs to lend to this large but fragmented small business segment.

How are you finding India market compared to the global?

than 10% of India’s retail payments are currently digital, creating a market opportunity of more than $500 billion annually. Similarly, the shortfall in supply of funds to SMEs is estimated to be in excess of $300 billion and is difficult to solve in the absence of technology-based solutions. Further, the Indian market requires a differentiated approach to product design given the communication infrastructure challenges and low levels of awareness about digital technologies. Innoviti has focused on an experience-centric approach to solving these problems through its uniPAY Next and smelending.com platforms. Deep technology has been used to build solutions that work within existing infrastructure constraints to deliver payment processing reliability of more than 96% vs the industry average at ~80%. Enhanced reliability builds confidence in digital payments with both the consumer and the merchant. Transaction processing time has been brought down to an average of ~3 seconds (vs industry averages at 7-8 seconds), thus delivering a superior experience to the customer.

How is Innoviti planning to tap markets like the Philippines, Indonesia and Sri Lanka?

Innoviti’s strategy for expansion in APAC will be focused on two key themes, a) distribution of credit to SMEs and consumers in APAC countries where retail credit penetration is low, and b) use of technology to improve reliability of payment transactions in countries where the communication and payment infrastructure is under developed. Specific Innoviti proprietary technologies like #LookAhead for LCMRR routing, EMI processing at retail POS terminals and deep integration of retailer’s billing and payment systems will be at the core of penetrating these new markets.

What is the roadmap and future plans of the company?

Innoviti’s recent round of Series B funding of Rs.120 crore (~US$18 million) will be used to further its vision of digitally organizing the flow of money for businesses across the retail supply chain both in India and in newer APAC markets.

Specifically, this would include: a) aggressively market the uniPAY Next experience to acquire customers looking for greater speed and reliability in their payment acceptance, b) rapid expansion of smelending.com platform to provide working capital loans to kirana stores and brand franchisees, and c) expand the product to address payment and lending issues beyond just retail to more businesses across the supply chain.