BharatPe - Fintech Payments
Founded in 2018, BharatPe is India's leading merchant payment company.
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Founded in 2018, New Delhi-headquartered BharatPe is a one-stop shop for digital payments. It offers a portfolio of products to help merchants accept digital payments through QR codes that support government-backed UPI payments infrastructure. The company also helps merchants and shopkeepers across cities acquire a loan to facilitate their working capital needs and lend money to fellow merchants and traders who are in need of cash.
In 2021, BharatPe entered the unicorn club after raising $370M in a Series E funding round bringing its total valuation to $2.85, a three-fold jump within 6 months. The company is among the top 5 most valued Fintech startups in India with over 7 million merchants on board and collaborations with more than 150 UPI apps like PayTm, PhonePe, Google Pay, BHIM, and more.
The company is backed by notable investors like Beenext, Sequoia Growth, Insight Partners, Steadview Capital Management, Ribbit Capital, Coatue Management, and Amplo.
Business Overview & Products
Bharatpe is a payments app that provides end-to-end solutions for businesses. App features include:
1 QR code for all payment apps (Paytm, BHIM, and 150 others)
No setup or transaction fees for payments
Loans up to INR 700,000 ($9.3k) without collateral and processing fee
Credit Card cum debit card with up to INR 100,000 ($1.3k) credit limit
Bill payments with numerous merchants added
Points redeem option that ends with a grand prize to meet cricket stars
Bharat Swipe: India’s first zero-fee card machine
The company operates across 100 cities in India and plans to expand to 300 by next year.
How It Works
BharatPe has an artificial intelligence (AI) based algorithm which is extremely useful for shopkeepers as it gives them valuable insights into their business’s cash flow. The AI algorithm picks up signals like the kind of transactions a shopkeeper makes or the usage of other products on their platform and this information is then analyzed along with the merchant’s credit score and loan history to make a loan offer. Once the shopkeeper passes this screening process, the firm’s NBFC partner processes the loan and in a few days credits the amount in the merchant’s account. The loan can be paid back in daily installments with a low-interest rate and the entire process is digital and collateral-free which makes it an attractive option for users.
For merchants, in order to process digital payments, they have to put up a QR code in their shops. Customers can pay merchants digitally using a UPI-powered payment app. The app also allows merchants to track customers who owe them money and receive periodic reminders courtesy of a simplified dashboard on their phones.
Business Model & Pricing
BharatPe’s business-to-business model is focused on creating products and services majorly targeting merchants. It not only provides a free digital payments platform but also grants merchants and shopkeepers instant loans with low-interest rates. The company does not charge any transaction or setup fees and has no hidden charges to speak of. It does not charge merchants commission for processing payment so that it becomes an integral part of their customer’s business and cash flow.
To boost the revenue on its platform, Bharatpe relies on the interdependent recurring connection of credit and application usage. A huge chunk of the company’s revenue comes from the interest income it earns on the loans it issues to shopkeepers and merchants. These low-cost loans are provided at an interest rate of 2% while the time period varies from 3 to 12 months. Moreover, the company has also recently introduced Peer to Peer (P2P) lending at a 12% interest rate for both individual lenders as well as borrowers.
In 2021, BharatPe disbursed loans worth $214M to 180,000 merchants which led to revenue of $93M, a 7x increase from last year’s $15M revenue. It also registered 106 million monthly UPI transactions which were worth $830M in March 2021. The company enjoys an 8.8% market share and has expanded its footprints from 30 to 100 cities in India.
In August 2021, it became India’s 19th unicorn of the year after raising $370M in a Series E funding round. The startup has raised $699.9M to date and is now valued at $2.85B. The company was reported to have over 7 million merchants and their app had been downloaded close to 10 million times
Founder(s) & Team
Shashvat Nakrani (LinkedIn) – Co-Founder at BharatPe.Shashvat, an IIT dropout is the youngest person to feature in the IIFL Wealth Hurun India Rich List. He was in his 3rd year at IIT-Delhi, pursuing a bachelor's degree in Textile Technology when he co-founded BharatPe after recognizing a business opportunity for a payment gateway.
Bhavik Koladiya (LinkedIn) – Group Head and Co-Founder at BharatPe. Alongside working at BharatPe, Bhavik has also been an angel investor for many companies including Digifin, Pristyn Care, ProtectPay, Flatheads, Walrus, Vested Finance, CityMall, Vahan Inc and LenDenClub.
Ashneer Grover (LinkedIn) – MD and Co-Founder at BharatPe. Ashneer, an IIT graduate has served as the Chief Financial Officer at Grofers and as Director of Corporate Development at American Express. Prior to co-founding Bharatpe, he also worked as Vice President at Kodak Investment Banking and Head of New Business at PC Jeweller Ltd, the second-largest Jewellery retailer in India.
History & Evolution
Towards the end of 2017, Shashvat Nakrani, an IITian was working on a startup when he identified a huge gap in the digital payment market. Merchants were hesitant about accepting online payments because no payment getaway or wallet charged less than 1.5% commission. That is when he decided to come up with a platform for merchants that would leverage Unified Payments Interface’s (UPI) star feature- interoperability, to remove all charges on payments. Merchants would need only one QR code that could be used by any payments app. However, Shashvat was unsure of how to commercialize the idea when Ashneer Grover, his 16 years senior at IIT entered the scene and gave direction to the idea courtesy of his vast experience in the finance industry.
In 2018, BharatPe launched its merchant-focused QR code as a pilot in Nehru Place, a commercial hub in New Delhi. In August it commercially launched the QR code and was able to bring 1000 merchants on board In the first month, attracted by the zero transaction fees and interoperability feature.
In 2019, BharatPe announced short-term credit options for merchants by partnering with Apollo Finvest to enable lending on its platform at an interest rate of 1.67% per month. That year it also launched India's first UPI Bahi Khata for merchants which allows merchants to record their cash/credit (Udhar) sales customer-wise, request accounts receivable from customers via SMS payment links, and keep track of accounts payable to suppliers.
In 2020, BharatPe launched two voice-based features during the pandemic. Paisa Bolega, a button introduced in the BharatPe App that converts the shopkeeper's smartphone into a loudspeaker, announcing the value of transaction received. BharatPe Balance provides a single snapshot of the shopkeeper's daily QR collections, balance in 12 percent interest a/c, and the loan limit. The startup also launched Bharat Swipe, a POS card machine for merchants with zero fees and a lifetime warranty. That year it claimed to be the third-largest player in the merchant UPI payment acceptance space and reached an all-time high of 5% market share by transaction value and 7 percent market share by transaction volume.
In 2021, BharatPe acquired Payback India, a multi-brand loyalty program from American Express and ICICI Investments Strategic Fund. It also entered the Buy Now Pay Later (BNPL) category with the launch of Postpe, a shopping and payment platform that lets users shop now and pay next month. The company also forayed into p2p lending with ‘12% Club’ which allows individual investors to invest and borrow at 12% interest through the app. It entered the unicorn club after raising $370M in a Series E funding round and is now valued at $2.85B. The startup was also issued a Small Finance Bank (SFB) license by The Reserve Bank of India (RBI).
What makes BharatPe stand out from its competitors is that they have chosen to target merchants, a market with immense untapped potential. It does not have to spend too much cash to maintain a base of customers, as the no fees policy is enough to attract customers. Moreover, the lending feature for merchants and shopkeepers also serves as a competitive advantage since they were the first company to make lending this easy and quick for merchants.
In Feb 2022, the company terminated Ashneer Grover’s wife, Madhuri Jain who serves as Head of Controls at BharatPe on charges of financial irregularities and canceled her stock options. This has started a cold war between the investors and Grover as the founder filed an arbitration plea to stop this probe into alleged financial mismanagement in the company which was refused by the Singapore Arbitration Centre (SIAC). The whole scandal started when an audio clip of an abusive conversation between Ashneer and a Kotak Mahindra bank employee was leaked, where the former was abusing the bank employee for not getting him a stake in Nykaa IPO. Initially, Ashneer denied this claim and termed it as an attempt at extortion but later he deleted that tweet.
Digital payments in India are expected to touch $1Tr by 2026, after hitting a value of $300B in 2021, mostly propelled due to the government creating a favorable environment for the same.
Driven by cheap internet, high smartphone penetration and government initiatives, India outpaced the world by registering 25.5B+ digital payment transactions in 2020.
Suggested starting points to dive deeper
Inside story of how Centrum and BharatPe ‘unified’ for their banking dream. But challenges start now. (The Economic Times)
BharatPe Redefined India's Payment Ecosystem. The Unicorn Now Wants To Challenge India's Banks (Manu Balachandran, Forbes India, Sep ‘21)
Why BharatPe offered payments free of charge? (Nevin John, Fortune India, Oct ‘21)
Centrum And BharatPe's Plans For INR 40,000 Cr Small Finance Bank (Sethu Pradeep, Inc42, Oct ‘21)
BharatPe rolls out BMW bikes to new joinees; extends offer to product mangers (Business Today India, July ‘21)
[Product Roadmap] How BharatPe built a robust, easy-to-use tech product for 50 million SMEs (Sindhu Kashyaap, Your Story, Oct ‘20)