“In terms of technology leapfrogging, nothing has quite matched what the mobile phone has managed to achieve,” says Sunil Rongala, VP, strategy, innovation & analytics, World Line, in an Indians’ digital payments report. “Just a decade ago, the mobile phone was used primarily for making calls and messaging and listening to music. The progression then was to news, videos, e-commerce, banking, utility, travel- and wallet-apps, among others.
As far as the payments were concerned, initially it was P2P as well as through a dongle that was connected to the phone”. The report sums up that, if previous data is anything to go by, it is clear that mobile phone-based transactions will easily grow well over 100 per cent annually for the next few years to come. “As mobile payment app penetration grows and there is still a significant way to go, the transactions tracker only points up,” Rongala adds.
In 2010, a young Kunal Jhunjhunwala was working at Hungama Consumer Business, as a part of a team that aspired to build an Indian parallel to iTunes. While working on the assignment, Jhunjhunwala noticed an insurmountable challenge in getting the existing payments players to accept low denominations such as Rs10 and less.
“The only other way was to plead to the telecom players with an exorbitant commission structure, thereby leaving a negligible amount for people in the product chain,” explains Jhunjhunwala, which set him to launch a company as a payment service outfit. “This was the gap that seeded the initial idea of a bridge called airpay.”
Jhunjhunwala started airpay a decade ago with the core mission of keeping payments simple, light and fresh as air. Unlike the competitors aiming at the consumer-centred play, airpay found its calling in empowering traditional businesses by digitising their collections and rejuvenating their distribution chain. In doing so, it not only steered away from constant margin pressures, but also laid a robust foundation for the empowerment ecosystem airpay is turning out to be.
This venture was India’s first integrated omni-channel financial services platform, built to eliminate inefficiencies in the money movement chain. With nearly a decade of experience as a payments aggregator, its platform is used by consumers, businesses, banks, and financial institutions worldwide. The platform allows its clients to accept payments from across many touchpoints such as web, mobile, call centre, IVR, email, SMS and face-to-face through 100 plus financial instruments – not limited to cash or cheque or any other legally approved currency.
In the initial years, the tech prowess of airpay paid off through a dedicated payments gateway. Jhunjhunwala, being an entrepreneur, had come in at a very early stage. As a teenager, he had launched E-Phoria Technologies, a digital solutions company, aimed to help SMEs identify technology needs. “Being a part of a highly successful entrepreneurial family (as the nephew of the big bull, Rakesh Jhunjhunwala), success always had a steeper definition,” says Jhunjhunwala. “Even after bootstrapping airpay, my father and uncle invested in the business only after I raised my first seed round from Kalaari Capital," adds Jhunjhunwala.
Setting the ecosystem
With technology at the core of its operations, airpay chose to expand into tier II and III cities. In doing so, it relied on its existing business of payment gateway. Having served multiple companies to solve a no-frill and highly secured pipeline for accepting digital payments, airpay stumbled upon the growing need for receivables management at the other end -- the salespersons. For example, the company served many B2C products companies, where an army of on-the-ground representatives typically handled collections.
These representatives found it quite challenging to deposit the cash into a bank, as a long waiting time led to a loss of income opportunities. At the same time, the delay in depositing cash often inflates the working capital cycle at the corporate end. So, airpay focussed on a win-win proposition by identifying multiple kirana stores and mom-and-pop shops.
The idea was simple – empower the kirana stores to become collection centres, which will improve the efficiency of the salespersons and reduce waiting time. In addition, cash deposited with the kirana stores will lead to a second revenue generation and offer better leg room to grow by providing a host of related services, such as ticket booking, money transfer, cash withdrawal, bill payment/ recharges and insurance, among others. “We call these store owners airpay vyaapaaris”, says Jhunjhunwala.
“We believe this is the answer to India’s employment puzzle, wherein promoting a collaborative, entrepreneurial ecosystem, based on accessible technology, as well as a host of management tools and compliance systems lead to a new age of self-reliant Indians across towns and villages”, adds Jhunjhunwala.
In the past two years, airpay has not only launched the airpay vyaapaari network across India to plug the last mile in financial services; but it has also done it without any marketing or advertising spend – a rarity in the world of fintech. The company raised its last round in 2017 and claimed to have made a network of 250,000 plus airpay, catering to 3.5 million plus consumers across 533 districts and 5,700 villages. “The monthly enrollment rate continues at above 10,000 vyaapaaris”, says Jhunjhunwala.
Airpay is also moving into what it calls ‘assisted eCommerce,’ which helps individuals and families outside of India’s largest cities move more fully into the digital ecosystem. These consumers, Jhunjhunwala says, understand and use mobile technology, but they are not necessarily comfortable shopping or transacting on their mobile devices.
Against such a scenario, an on-site consumer might scroll on their device to find goods or services they want to buy, hand the device to the agent/ shopkeeper to help complete the purchase, pay in cash or credit instrument, and have the order shipped to the storefront for pick-up. “We will be enabling financial services at the last mile to the 500 million people in India who do not have access to formal financial services, through the creation of assisted financial services,” says Jhunjhunwala.
Rapid acceleration
In the past decade, airpay has grown from three to 360 people-strong. According to Jhunjhunwala, airpay is already in black and placed efficient capital utilisation at the core of its operations strategy. Sensing the talent shift to hometowns, airpay quickly opened a new office in Kochi and saved costs without cutting any corners on salaries and bonuses. “Kochi has become our largest development hub and gives us ample talent and space to scale up in the future too”, says Jhunjhunwala.
The next key growth strategy unfolding at airpay is its global ambitions. Being a tech company and having demonstrated success in high competition, high-growth markets such as India, airpay now intends to capture a fair market share in the Middle-East and African countries. “There is a huge demand for white labelling and being a reputed player in the space, we harbour global ambitions,” feels Jhunjhunwala.
There is a huge demand for white labelling and being a reputed player in the space, we harbour global ambitions
Ample opportunities
According to the estimates done by Morgan Stanley, digital payments have tripled – from 2.5 per cent to 7 per cent of the GDP -- during the past three years, which is further forecast to touch 10 per cent by 2023. For airpay, the competition is the least of their concerns, considering a B2B2C business model and a billion-plus nation, with still underpenetrated digital payments behaviour and growing demand for employment.
“We at airpay are not offering loans but an ecosystem comprising second income, distribution and community-based network built on easy to use and secured technology,” adds Jhunjhunwala. One of the most prestigious proofs of impact has emerged from the Vidarbha region of Maharashtra, wherein aipay has empowered farmers through training and collaboration to increase their respective incomes by ten folds.
“In India, it is safe to say a significant number of transactions are being done through the mobile phone thanks to the advent of UPI and the rollout of millions of QRs at physical merchant locations. E-commerce transactions that are being completed through UPI also have a mobile component to it. In April 2020, the number of transactions done through mobile apps was 1.12 billion; in June 2021 that number was 3.7 billion. Similarly, the value in April 2020 was Rs3.6 lakh crore, while it was Rs11.4 lakh crore in June 2021,” points out Rongala, according to whom, in terms of payments made at physical merchants by mobile (also called proximity payments), China leads the way with 81 per cent of the smart phone users, having made payments in the previous six months. Denmark comes a distant second with 41 per cent.
In terms of penetration of mobile payment adoption (which is also a decent indicator of the potential market size), China again dominates at 39.5 per cent, followed by South Korea at 29.9 per cent and Vietnam at 29.1 per cent. India is at sixth with 20.2 per cent and the US is at 17.7 per cent. In terms of average annual transaction per user, the US dominates at $7,961, while China is at $2,300 and India, at $80.
Given the thrust of the government of India to empower grassroots villages and tehsils through banking, investing, and wealth creation. airpay continues to soar, while keeping its next move under the radar for sure.