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February 2015
Indian Digital Payments
At an ‘Inflection Point’ for a high-growth phase
Strictly Confidential
• This note on ‘Indian Digital Payments’ is presented solely for the internal use of the recipient to whom it is marked by Aurum Equity Partners LLP (‘Aurum’) and does not carry any right of publication or disclosure to any other party.
• In preparing this note Aurum has relied upon and assumed, without independent verification, the accuracy and completeness of all information available from published and public sources. Accordingly, neither Aurum nor any of its affiliates, shareholders, directors, employees, agents or advisors make any representation as to the accuracy, completeness, reasonableness or sufficiency of any of the information contained in the note, and neither of them shall be liable for any loss or damage (direct or indirect) suffered as a result of reliance upon any statements contained in, or any omission from this note and any such liability is expressly disclaimed.
• Aurum has developed this note on its own behalf and without prejudice. This note should not be construed as an offer to sell any securities in or assets of any of the companies referred to in this document, or an invitation to offer.
• © 2015 Aurum Equity Partners LLP. All rights reserved. In this document, “Aurum” refers to Aurum Equity Partners LLP, (a limited liability partnership firm).
Disclaimer
2
Strictly Confidential
Dear Reader,
This report is our attempt to provide an overview of the digital payments landscape in India and Aurum’s views on where the sector is headed in the medium term. Digital payments is expected to be one of the biggest beneficiaries of the ‘Digital Revolution’ currently being witnessed. Increasing banking reach, larger accessibility to broadband, more smartphones and enabling network infrastructure are all expected to drive ‘Electronization’ of payment systems. Despite all its potential, several questions remain unanswered about how things will unfold in medium term. Will the RBI be able to balance consumer well-being with profitable business models for companies? Will the niche promising companies be able to scale up profitably and achieve sustainable transaction volumes? Will the main enabler ‘internet story’ pan out as expected? We have tried to collate maximum possible secondary data from disparate sources and brainstormed to arrive at possible future trends in every segment. These trends were then discussed with our pool of industry experts and validated. As we continue to learn and improve, we would welcome feedback from every reader about how we can do better. Please write to us with your feedback on the report. Aurum Equity Partners LLP
Foreword
3
Strictly Confidential
About the Authors
Anshul Gupta Lead & Executive Team Member Internet Related Business Aurum Equity Partners LLP anshulgupta@aurumequity.com
Sanjay Bansal Founder and Managing Partner Aurum Equity Partners LLP sanjaybansal@aurumequity.com
Strictly Confidential
Contents
5
Section Page No.
1. Executive Summary 6
2. Indian Payment Landscape 10
3. Automated Teller Machines (ATM) 18
4. Point of Sales (PoS) 25
5. Cards 32
− Debit Cards 33
− Credit Cards 36
− Prepaid Cards 39
6. Electronic Payments Market 45
− Large Value Settlements & Online Payment Gateways 46
− Mobile Wallet 51
7. Payment Banks: Aurum View 56
8. Past Transactions 59
Strictly Confidential 6
1 SECTION Executive Summary
Strictly Confidential 7
Executive Summary (1/2)
• ‘Payment System’ is the backbone of country’s economy with transactions across paper, online, mobile etc.
• Payment ecosystem in India is evolving rapidly on the back of ‘digital revolution’ currently being witnessed. Government’s increased focus on reduction of paper transactions is also resulting in change in spending habits
Government Initiatives
• Government’s initiative ‘Jan Dhana Yojana’ was focused on financial inclusion and opened 115 million bank accounts covering 99.74% of the un-banked population
• Recent scheme on ‘Direct Benefit Transfers’ on cooking gas involves 25 million households and is the largest Direct Benefit Scheme in the world
Digital Revolution
• Aurum believes Digital Payments will be one of the major enablers if India has to go the ‘digital way’
• India boasts of the third largest Internet user base globally, estimated at 213 million in 2013 and expected to reach 564 million by 2020
• E-tailing market, estimated at US$ 13 billion in 2013, is expected to reach US$ 60 billion by 2020
Favorable Demographics and Enabling Infrastructure
59% of India’s population is under 39 years of age, resulting in higher discretionary spend (CAGR 2011-16E: 16%)
Over 900 million mobile users and improving network connectivity present a potential high growth story
Strictly Confidential 8
Executive Summary (2/2)
• Aurum has relied on publically available information from RBI and National Payments Corporation of India (NPCI) for factual data in this presentation. Aurum views are based on our interaction with payment companies and our analysis of the space
• Major themes in sub-segments:
— ATMs:
o One of the biggest beneficiaries of financial inclusion theme and opening of bank accounts for the un-banked
o Banks largely outsourcing ATM activities. Efficiently run companies to build successful business models and attract capital
— POS
o Moderate growth in conventional POS to continue
o M-PoS better suited for smaller merchants and will continue to gain more traction
— Cards
o Robust growth in debit cards to continue, with more people coming under formal banking system
o Increasing transaction values across different cards to drive other segments (ATMs, PoS, Payment Gateways)
o Adoption of prepaid cards by govt. for benefits transfers will be a key determinant for prepaid segment
— Electronic
o Online payment gateways to experience non-linear growth on the back of behavioral shift towards online
o Mobile Wallet segment is still in nascent stages. Aurum believes 2-3 players will dominate the market in the medium term
— Cash Management
o Remittances market dominated by banks and post offices, with their enormous reach. Payment Banks is the new model to watch out for
Strictly Confidential 9
Experts Speak
“We, at Smart Data, believe that the digitization of payments for the masses is a function of two factors. (1)
Necessity, which will be driven by government regulations. On an as-is basis, this factor is not that powerful
and government needs to take concrete steps to reduce cash transactions and (2) Convenience: Payment
Companies will come up with disruptive innovations to ensure ease of transacting. This ease will become
the driving factor for the general public to move away from cash to electronic. New technologies like NFC
and easy recharge points may become the driver for this change.”
Sandeep Jain CEO, Smart Data Processing Services
“Thanks to the progressive policy interventions of the Government of India & the RBI, the pioneering
efforts of various banks & financial institutions, the Indian payments eco system is set for an explosive
growth. More and more people are now coming under the net of financial inclusion and digital payments
ecosystem. ATMs stand at the very beginning of a typical consumer evolution into the adoption of
advanced payment services. White Label ATM (WLA) players provide the critical last mile in this chain by
deploying ATMs in smaller towns and villages. At BTI, we have deployed over 85% of our ATMs in towns
below tier 3 where we see a significant business opportunity. While we aggressively ramp up deployment
of White Label ATMs in these towns/villages, we would have supported the larger pillar of financial
inclusion in a significant manner.”
K Srinivas CEO, BTI Payments
Strictly Confidential 10
2 SECTION Indian Payment Landscape
Strictly Confidential
Indian Payment Landscape
11
Modes of Payment
ATMs
1
POS Terminals
2
Electronic Payments
4
Cash Management
5
Cards
3
Number of ATM’s in India has witnessed a strong growth (CAGR of ~30% in the 2009-14 period) and stood at 173,697 in Oct, 2014
Ease of regulations by RBI, introduction of newer business models, reducing technology cost and surge in transactions driving ATM growth
Number of POS terminals in India stood at 1,111,576 in Oct, 2014 and is expected to grow on the back of low cost M-POS terminals
Number of transactions per POS terminal in India stands low at ~1,384 per annum
442 million debit cards in circulation with the annual transaction value at US$ 408 billion. SBI is the market leader commanding a 29% market share
20 million credit cards in circulation with the annual transaction value at US$ 29 billion. HDFC is the market leader in this segment with 28% share
ECS/NEFT/RTGS payments have been witnessing significant growth Share of paper-based instruments in the volume of total non-cash
transactions declined to 34% in 2014 Total e-commerce market in India is estimated at US$ 13 billion with online
travel and e-retailing being the key contributors for this segment growth
Domestic remittance market estimated at US$ 20 billion. Of this only 40% is accounted by post offices, banks and business correspondents
India was the largest inward cross-border remittance market having received US$ 70 billion
Strictly Confidential
Market Segments and Major Players
12
Payment Services
Cash Management Electronic Cards POS Terminals ATMs
Equipment Manufacturers: NCR, Diebold, Wincor Nixdorf
ATM Management: Prizm, Tata Payments, AGS Transact, EPS, Euronet, FSS, BTI Payments
Second Level Outsourcing: CMS, Transaction Solutions
POS Owners: Banks
Equipment Manufacturers: Verifone
POS Management: Prizm, Atos, FSS, Transaction Solutions, Pine Labs, Smart Data
Mobile POS: Ezetap, M Swipe
Credit/Debit Management: Banks, In-Solutions Global, Euronet, Tata Payments
Prepaid Cards: Itz Cash, Inde Pay, Beam Money
Loyalty: Loylty Rewardz, Accentiv India, MintM Loyalty, TLC Group
Payment Gateway/ Aggregators: Billdesk, CC Avenues, Citrus, FSS
Mobile Wallet: Paytm, Oxigen, ZipCash, Airtel Money, PayMate, M Pesa
Core Banking Solutions: Tata Payment, Sarvatra Tech, FSS
Networks: Visa, MasterCard
Remittances: Itz Cash, Euronet, Beam Money, Oxigen
Cross Border Remittances: Times of Money, Western Union, Euronet
Bill Payment: Easy Bill, Transaction Solutions, Smart Data, Itz Cash
Strictly Confidential
Electronic Payment Systems in India
13
Large Value Clearing and Settlement Systems
Retail Electronic Payment Systems
Payment Systems
Customer Remittance
Total Inter-Bank Remittance
CCIL Operated Systems
Value(FY2014): US$ 13,042 billion
Value(FY2014): US$ 6,806 billion
Value(FY2014): US$ 10,715 billion
ECS NEFT Cards
ECS (Credit): US$ 43 billion
ECS (Debit): US$ 25 billion
Value(FY2014): US$ 1,062 billion
PoS Credit Cards Value(FY2014): US$ 29 billion
PoS Debit Cards: US$ 17 billion
67% 65% 59%
33% 35% 41%
0%
20%
40%
60%
80%
2009 2010 2011
Paper Non Paper
Paper dominates the transaction volume
16% 12% 10%
84% 88% 90%
0%
20%
40%
60%
80%
100%
2009 2010 2011
Paper Non Paper
In value terms, transactions have largely been electronic
Payment systems dominated by large value clearing and settlement systems
Aggregate value of cheque transactions (CTS and MICR) in FY14 was at US$ 1,366 billion and has observed shrinkage of ~5% annually over last 5 years
Source: RBI, Market Research
Strictly Confidential
Consumption Driving Digitization
14
Source: RBI, Market Research
6%
12% 12%
4%
12%
10% 10%
14%
16%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
FY2000-05 FY2005-10 FY2011-16
Total Consumer Spend (CAGR) Essential Consumer Spend (CAGR) Discretionary Consumer Spend (CAGR)
Discretionary spending to grow at 16% annually in 2011-16 period
1,039.3
68.5 22.8 11.4 0
200
400
600
800
1,000
1,200
Paper Electronic PoSTransactions
Others
(US$
bn
, FY
12
)
Paper is still the preferred mode of payment (FY 2012) Payments in India largely consists of high value B2B transactions, which are mostly routed through electronic systems. This is the reason for the significant contribution of electronic payments in terms of value
Consumer transactions are still dominated by cash (~91% of the total transaction value in FY12)
Government is taking active steps to digitize the consumer spending and minimize the flow of hard currency
Strictly Confidential
Government Initiatives to Reduce Cash Usage
15
Source: RBI, Market Research
Key Advantages of Non Cash Transactions
The high cost of paper payments ( limited life and high transaction costs of cash) and better regulatory oversight in non paper transactions makes e-payments more favourable
Cashless transactions also addresses certain key issues for India:
— Large unbanked population
— Unregulated cash economy
— Need for financial transparency
Realizing these advantages, Indian regulators are proactively setting policies to ensure growth in e-payments
Evolution of E-Payments
Early 2000 Present State Going Forward
Computerization and networking of the Indian
Financial Sector
Creation of e-payment infrastructure in India, and steps taken to create a shift towards
e- payments
New initiatives to manage e- payments, increase in security
and enhance offerings
Migration from branch level computerization to core banking solutions
INFINET, hybrid network of VSAT’s and leased lines – set up by RBI through IDRBT
Electronic Clearing Service (ECS) Electronic Funds Transfer and
Real Time Gross settlement, National Financial Switch for ATM’s
National Payments Corporation of India, to develop a robust retail e-payment system
Base regulations for mobile payments, prepaid cards and internet commerce
EFT at national level Card payments in government
benefit schemes Imaging and cheque truncation;
E-Cheques
Strictly Confidential
Reducing Currency in Circulation
16
Source: Indian Banks Association
12.2 11.8
11.8 11.5
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Brazil
Russia
India
Indonesia
China
S.Africa
Turkey
Currency in Circulation/ GDP
2013
2012
2011
2010
Currency in circulation to GDP ratio in India is one of the highest in emerging economies, implying large share of cash transactions. This ratio has been on a downtrend for the last 3 years
Strictly Confidential
Mobile Banking: Exponential Growth
17
Source: Indian Banks Association
Despite a very high mobile density, the potential for offering financial services is largely yet untapped
— Over 900 million mobile users in the country but only 36 million mobile banking customers
Underscores the need for active collaboration between banks and telcos
— Irrespective of the channel through which such services are provided, such as, SMS, applications, USSD
Regulatory measures
— TRAI has set the ceiling tariff for USSD-based mobile banking services
— RBI has taken steps to provide accessible, convenient as well as cost effective services to mobile banking customers
13 23 36
18
60
224
0
50
100
150
200
250
-
5
10
15
20
25
30
35
40
FY12 FY13 FY14
No of Users (mn) Transaction Value (INR bn)
Strictly Confidential 18
3 SECTION Automated Teller Machines (ATM)
Strictly Confidential
75,645
96,742
116,378
162,453 173,697
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2011 2012 2013 2014 Oct-14
Number of ATMs in India
Overview
19
Low Penetration of ATMs Overview
Total number of ATMs in India stood at 173,697 in Oct 2014, implying a CAGR of ~29% in 2011-14 period
Lowest penetration of ATMs among the emerging economies with 138 ATMs per million people
Average number of ATM’s per million people in key cities was 206 against national average of 59, indicating disparity between rural and urban areas
SBI is the dominant player in the industry accounting for 26% of the total number of ATMs
Growing Market Size Government Initiatives and Market Potential
Reduced fees for ATM transactions. For use of other bank’s ATM, first five transactions are free of cost post which nominal fee of INR 20/ transaction
Permitted banks to install off-site ATMs at centers/places identified by them, without need to take permission
PSBs outsourcing ATMs to private companies on a brown label model to scale up rapidly
RBI permitted White Label ATMs for better coverage in rural areas
Increased number of ATMs to drive demand for related services such as cash management services, maintenance of ATMs etc.
Source: RBI, Market Research. Note: Data for USA as on Dec 2009; Brazil and China as on 2010; Data for India as on Oct 2014
1,382
905
202 138
14,008
4,360
30,843
41,562
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
-
200
400
600
800
1,000
1,200
1,400
1,600
USA Brazil China India
Tran
sact
ion
s p
er A
TM p
er y
ear
Nu
mb
er o
f A
TMs
per
mill
ion
peo
ple
Number of ATMs per million people Transactions per ATM per year
April
Strictly Confidential
SBI , 26%
Axis Bank, 8%
ICICI Bank, 8%
HDFC Bank,
7% Punjab National Bank,
5%
SBI Associates, 5%
Union Bank of India, 4%
Canara Bank, 3%
Others, 31%
Bank of Baroda, 4%
Market Players
ATM network of ~174,000 in October 2014
Source: RBI
Market Share
For Oct 2014
o SBI (excluding associates) holds 26% of Indian ATM network with 45,463 installed ATMs in Oct 2014; Associates of SBI hold another 5% of the market with 8,084 ATMs
o Growth of ATMs expected to sustain current momentum on the back of White Label ATMs being set up by private players
20
Strictly Confidential
Traditional Model
• Banks set up the ATM infrastructure including the location, installation, interiors and security, among others
• The total cost incurred lies in the range of US$ 16,000 – US$ 20,000
• Bank manages the settlement and other banking processes, and charges for transactions outside its network
• Drawbacks
• Time consuming process of setting up an ATM
• Worries of daily management
• Higher capital expenditure and technology requirements
Brown Label Model
• ATM management is outsourced to a third party vendor; bank continues to manage the settlement processes
• Transaction-based model where the setting up and running cost is borne by the vendor who gets paid on a per transaction basis
• For transactions outside its bank’s network, a fee charged which is shared between the vendor and the bank (vendor keeps 70-80%)
• All banks are already using this method to expand their ATM network
White Label Model
• Non-bank entities can apply to RBI and set up, own and operate their own ATMs
• Operators do not have direct access to core-banking operations. Hence, they require a "sponsor bank“ to serve as the settlement bank
• WLA operators receive a fee (INR 15 for Cash Transaction and INR 5 for Non Cash Transaction) from the banks for the use of ATM resources by the banks’ customers. They will not be allowed to charge customers for transactions
ATM Business Models
21
Rising maintenance costs along with time consuming nature of the traditional model has made way for outsourcing of ATM operations by banks…
Strictly Confidential
Major Players – ATM Management
22
Source: Aurum Research
Company Name Service Offering ATM Model
NCR Corporation ATM Manufacturing, ATM Management Brown Label
Diebold Systems ATM Manufacturing, ATM Management, ATM Security N/A
Wincor Nixdorf ATM Manufacturing, ATM Management N/A
FSS ATM Selection and Installation, Site Up keeping, Cash Optimization and Loading Brown Label
FIS Global End to end ATM deployment and Management Brown Label
Prizm Payments ATM Selection and Installation, Management of ATM network Brown Label, White Label
TATA Communications End to end ATM deployment and management, Card Issuance and Management
Brown Label, White Label
AGS Transact Technologies
End to end ATM deployment and Management Brown Label
Euronet India Transaction Processing Services, ATM operations and Management, Field Services
Brown Label
Electronic Payments and Systems
End to end ATM deployment and Management Brown Label
BTI Payments End to end ATM deployment and Management White Label
Strictly Confidential
Aurum View on ATM Segment (1/2)
23
Non-Core Activity
for Banks
Banks are increasingly realizing the efficiencies specialized ATM operators bring to the table and how outsourcing eliminates needless coordination
An efficient ATM network lowers customer visits to branches and plays a key role in user convenience and stickiness
ATM is an investment heavy segment with each ATM requiring an average capex of INR 5-7 lakhs
A 20% annual growth (30,000 ATMs) translates into an investment potential of INR 15,000 – 21,000 million annually
According to 2011 census, 41% of country’s population is still un-banked
As this population starts opening bank accounts and using debit cards, ATM segment will be the largest beneficiary
Government launched Pradhan Mantri Jan Dhan Yojana (largest financial inclusion scheme in the world) opening 115 million accounts by Jan 2015
Scheme covered 99.74% of the households that were outside the banking system
RBI has been supportive in laying down a viable business model for White Label ATMs along with clear guidelines
Investment Intensive
Segment
Enormous Scalability
RBI/ Government
Initiatives
Strictly Confidential
Aurum View on ATM Segment (2/2)
24
High Investor Interest
ATM segment has attracted the most private equity interest with large ticket investments in all ATM players including Prizm, BTI Payments, FSS, AGS Transact etc.
This interest is expected to increase with an investor friendly government and enhanced focus on financial inclusion
ATM companies are increasingly realizing the economic attractiveness of installing ATMs in Tier3/4 regions, as compared to higher competition and rental costs in Tier 1/ 2 cities
Increasing willing to use banking services in rural areas with comparable average daily withdrawals compared to cities
Favorable Economics
in Tier 3/4 regions
o Aurum believes ATM segment will be the first beneficiary of changing Indian demographics and increased penetration of banking services
o Efficiently run companies will continue to attract capital from the investors and addressable market is large enough for the players to co-exist
Bank ATMs in urban areas face stiff competition from other banks, resulting in sub-optimal volumes
Increasing trend of WLAs may lead banks to close down unprofitable ATMs, resulting in aggregation of demand from all banks for WLAs and better profitability
WLAs May Lead to
Volume Aggregation
Key to Profitability:
Location &
Strong Cost Control
ATM profitability is largely dependent on transaction volumes, which is a result of pre-installation assessment and location identification
Monthly operational expenses (for 1 ATM) excluding rent range from INR 20,000 to INR 30,000. Key to profitability is to maintain these expenses at the lower spectrum
Strictly Confidential 25
4 SECTION Point of Sales (PoS)
Strictly Confidential
Overview
26
Low Penetration of POS Terminals Overview
POS terminals stood at 1,111,576 in Oct, 2014, implying a CAGR of ~22% in 2011-14 period
Lowest penetration of POS per million people among the emerging economies, indicating large potential for growth
Low penetration attributed to insignificant size of organized retail (~7% of total market) and low penetration in rural India
Other reasons include low transaction volumes in rural areas and high network costs in urban centres
Total number of POS transactions stood at 128 million in Oct 2014, with a monthly transaction value of US$ 4.9 billion
Positive Macro Drivers
Organized retail and hospitality (premium hotels) is a key driver of POS transaction value
― Retail industry to grow at 20% CAGR to reach ~US$ 760 bn by 2015. Penetration of organized retail increasing from 7% in 2012 to 10% in 2015
― Travel and tourism segment expected to grow at 8.2% through 2015. Hotel segment to reach a market of US$ 14 billion in 2015
‘Rupay’ is expected to bring down transaction charges
POS terminals increasingly being viewed as a low cost channel for collection of bills and making mobile payments
Growing Market Size
Source: RBI, Analyst Reports. Note: Data for India as on Oct 2014, Other countries data as on Dec 2010
24,951
1,845 888
1,296
1,967
1,384
-
500
1,000
1,500
2,000
2,500
-
5,000
10,000
15,000
20,000
25,000
30,000
Brazil China India
Number of POS per million people Transaction per POS
595,958 667,963
913,867
1,076,311 1,111,576
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2011 2012 2013 2014 Oct-14
Pos Terminals in India
April
Strictly Confidential
Acquirer Issuer Merchant Others
PoS Market in India
o Axis, HDFC and ICICI banks constitute ~85% of the installed POS market
o Currently, the typical acquirer fee is 0.2- 0.5%
o Leading credit card issuers include HDFC, Citibank, ICICI, SBI and Standard Chartered
o Leading debit card issuers include SBI, HDFC, ICICI, Axis and Citibank
o Interchange fee for debit cards is ~1.2%, while for credit cards the fee ranges between 1.2% -1.8%, varying by type of card
o Merchant fees typically range between 1.5% - 2.0% in most of the key markets. This fees has declined from the previous levels of 2.0%-2.5%
o Apart from the merchant fee, preferences for acquirer is also governed by allied services like working capital management, cash management etc.
o Key players providing outsourcing services for enablement and management of PoS terminals include:
• First Data
• Atos
• Smart Data
• HP Services
PoS Value Chain in India
27
Source: RBI, ATOS Worldline Industry Survey on Indian Payment Card Industry (2011), Analyst Reports
Strictly Confidential
Axis Bank, 22%
ICICI Bank, 27%
HDFC Bank, 19%
SBI, 15%
Others, 17%
Market Players and Share
28
Market Share
For Oct 2014
Source: RBI
o Three private sector banks, ICICI, Axis and HDFC account for 68% of PoS market, with ICICI being the largest (27% share)
o Penetration in rural areas to increase on the back of low cost Mobile PoS terminals (INR 3,000-4,000/ terminal against 20,000 for normal terminal)
o Increasing adoption of card payment at PoS machines with rapid growth in debit cards
Strictly Confidential
Emerging Opportunities
Installation Services
o Installation services deployment of PoS Devices at merchant locations
Third-party vendor provide the technology and transaction processing platforms, while the banks act as a sponsor for settlement of card transactions that take place on that PoS Network
In the race to cash upon the opportunities in the payment facilitation space, banks and third-party technology vendors are coming together to set up necessary infrastructure and create PoS networks of their own
Merchant Services
o Merchant services include merchant acquisition, merchant agreement and managing merchant profitability
Processing Services
o Processing services include authorization services and merchant settlement services
Maintenance Services
o Maintenance services include upkeep services for the PoS and other devices, as well as onsite training of the merchants with regard to use of the PoS devices for various transactions
Setting up PoS terminals helps strengthen the fee income component for banks
The merchant pays a commission of up to 1% per transaction, which is shared between the bank setting up the PoS terminal, the card issuing company and the payment gateway like Visa or MasterCard used
Expanding its PoS base helps banks to widen its customer base
As all participating merchants are required to open an account with the sponsor banks, setting up PoS terminals helps the to both widen its customer base and also improve its share of low-cost deposits
1
2
29
Source: RBI, ATOS Worldline Industry Survey on Indian Payment Card Industry (2011), News Articles
Strictly Confidential
Mobile PoS
30
Source: RBI, ATOS Worldline Industry Survey on Indian Payment Card Industry (2011), News Articles
Current Issues with Conventional PoS Major Players
Lack of profitability of Merchant Acquirers: Current MA model has low spreads, making it unviable to service small/ medium merchants
Poor use of technology: Business calls for extreme cost control and efficiency. However, most merchants are used to technicians doing site visits to perform simple upgrades
High-cost POS devices: India is a country with majority of low-ticket transactions. Addressing the market requires economic equations that are different from ones used in Western world
M PoS Advantages
Mobility and low cost
A business model which is suited to low ticket transactions and merchant & acquirer economics
Target markets for M-POS players are ecommerce, home delivery businesses – restaurants, taxi service providers, insurance agents, pathology labs and similar businesses
S No Company Investors Product
1 Ezetap Helion, American Express
Java, Windows and Android. iOS under development
2 M Swipe Matrix Partners, Axis Bank
Audio jack plug in machine. Java, iOS, Android app support
3 MOSAMBEE SIDBI Ventures Card reader, audio jack plug in
4 MRL POSNET
NA Android only. Touch screen reqd. PIN based not supported.
5 Mobi Swipe One97 Mobility Fund
Android only. iOS and Windows under development
Strictly Confidential
Aurum View on POS Segment
31
Conventional POS
Suited to
Large Merchants
Conventional POS machines cost between INR 20,000-25,000 per terminal. This cost along with 1%-2% of transaction value makes economic sense for larger merchants who have bigger transaction volumes
Aurum sees constrained growth in the conventional POS market, with majority of merchants eliminated by high cost structure
Low upfront investment (INR 2,000-3,000) reduces the payback period for the merchant significantly
Mobility is also a key advantage with booming e-commerce market and increasing preference towards home delivery for variety of goods
Merchant acquirers, even in M-PoS operate on wafer thin margins
Only way to recover high marketing and distribution costs is through achieving economies of scale in transaction volumes
Distribution presents a high barrier to entry and increases the gestation period significantly
Aurum believes the market to be dominated by 2 largest players in the near term
Ezetap and M Swipe being first movers and with robust investor backing are best positioned to dominate the market
New players with innovative allied products might generate investor interest
Mobile PoS
Addressing Issues
Distribution Reach
is the Key
Early Movers to
Have Advantage
Strictly Confidential 32
5 SECTION Cards
Strictly Confidential 33
Debit Cards
Strictly Confidential
Debit cards in India have experienced a eight fold increase in the last 8 years and are expected to grow exponentially in the near term
50 75
102 137
182 228
279
337
400 442
2006 2007 2008 2009 2010 2011 2012 2013 2014 Oct-14
CAGR 2006-14: 30.0%
In Millions
Outstanding Debit Cards
Debit Cards – Overview
34
Source: RBI
With proportionate growth in volume and value of POS transactions Debit card growth has registered a CAGR of ~30% over
the past 8 years and is likely to moderate to 20% growth over next 3 years
This is attributed to
— Opening of new bank accounts to the tune of 20-25 mn annually
— Additional 20 - 25 mn existing account holders are being issued debit cards each year
Growth is mainly because of banks promoting debit card spends by offering incentives like cash back and loyalty rewards
1.9 2.8 4.1 5.9 7.3 9.2 11.6 15.2 17.4
67 97 147 170 212
265
329
543 675
-
100
200
300
400
500
600
700
800
0.0
5.0
10.0
15.0
20.0
2006 2007 2008 2009 2010 2011 2012 2013 2014
Transaction Value (US$ bn) Transactions (mn)
Strictly Confidential
SBI , 29%
Axis Bank, 3%
ICICI Bank, 6%
HDFC Bank, 4%
Punjab National Bank, 6% SBI Associates,
8%
Union Bank of India, 3%
Canara Bank, 5%
Bank of India, 5%
Bank of Baroda, 4%
Others, 27%
Market Players
Source: RBI, Analyst Reports
Market Share
For Oct 2014
o State Bank of India emerged as the leader with a card base of 127 million, accounting for 29% share
o Punjab National Bank is in the second position with 28 million debit cards followed by ICICI with 24 million cards and Bank of India with 21 million cards in the market
35
Strictly Confidential 36
Credit Cards
Strictly Confidential
Number of outstanding credit cards has reduced in the past few years
23 28 25 19 18 18 20 19
7
10 11
10 13 16 25
29
0
5
10
15
20
25
30
35
0
5
10
15
20
25
30
2007 2008 2009 2010 2011 2012 2013 2014
Outstanding Credit Cards (mn) Transaction Value (US$ bn)
Outstanding Credit Cards and Aggregate Spending
Credit Cards – Overview
37
Source: RBI, Analyst Reports
The number of credit cards in circulation declined significantly after the financial crisis (2008) due to concern for bad debt and recovery
Banks have been closing inactive and unproductive accounts to reduce maintenance cost
Despite decrease in outstanding cards, transaction value has been unaffected due to closing down of inactive accounts
Moderate growth of ~15% is expected in the near future owing to favourable macroeconomic parameters
SBI , 15%
Axis Bank, 8%
ICICI Bank, 17%
HDFC Bank, 28%
CitiBank, 12%
Standard Chartered Bank,
6%
Others, 16%
Market Share
For Oct 2014 The Indian credit card segment is dominated by private
sector banks
HDFC Bank is the market leader with a market share of 28% on the back of its aggressive approach
ICICI Bank has adopted a cautious approach in the last few years and has a card base of 3.3 million as on Oct 2014 with a market share of 17%.
Strictly Confidential
Lowest penetration per million people
Growth Opportunity
38
Source: RBI, Analyst Reports; Note: Data for USA is as on December 31, 2009; For Brazil and China as on December 31, 2010; For India as on Oct 2014
3,603
908
172 15 0
1,000
2,000
3,000
4,000
USA Brazil China India
Credit Cards per million people ('000)
Rising Annual Transaction Value per Credit Card
1,750 1,140 1,531 0
500
1,000
1,500
2,000
USA Brazil India
Annual Transaction Value Per Credit Card (US$)
Drivers for Future Growth
Increasing per capita Income and growing consumption
Increasing net worth of the affluent class in India
— Credit card ownership amongst the affluent class is the lowest in the world
— Industry sources estimate that ~20% of the affluent people have credit cards in India compared to over 80% in countries, such as the US, the UK and Hong Kong
Favorable RBI Guidelines
— No regulatory restrictions on issuing credit cards for foreign banks, as opposed to commencing banking operations
— Enhanced security measures:
o All banks have migrated to EMV Chip and PIN based cards
o These cards are more secure against credit card fraud
— This will significantly help in consumers confidence and lead to an increasing number of transactions
Strictly Confidential 39
Prepaid Cards
Strictly Confidential
2%
98%
27%
73%
87%
13%
India is primarily a cash market, with its prepaid payment cards segment still being at a very nascent stage
4 6 8 11
15 22
30
42
59
2009 2010 2011 2012 2013 2014 2015 2016 2017
CAGR 2009-17: 40.0%
In INR Billion
Indian Prepaid Card Market In 2010, Visa conducted a research across six major cities in India, namely Bangalore, Chennai, Delhi, Hyderabad, Kolkata and Mumbai, to investigate the awareness and usage of prepaid cards among Indian consumers
Prepaid Cards Credit Cards Debit Cards
Yes
No
Only 2% of the respondents owned prepaid cards, compared to 27% and 87% of the respondents owning credit and debit cards respectively
o With the benefits like availability, cashless transaction and convenience of usage, the prepaid cards present a good opportunity as a new mode of payment to the Indian economy
o Prepaid cards are issued by two different models:
• Bank-led Model: Under this model, cards are issued by banks and distributed through their branches or through retail agents
• Non Bank-led Model: Under this model, cards are issued by independent entities through its network of retail agents
Prepaid Cards – Overview
40
Source: BCG Report on Prepaid Cards Market, ATOS Worldline Industry Survey on Indian Payment Card Industry (2011), VRL Report on Indian Prepaid Cards Market (2011)
Strictly Confidential
Indian Prepaid Card Market – Market Segmentation
The Indian market is largely dominated by payroll cards, with the top three players controlling more than 70% of the prepaid card market
Payroll Cards, 34%
Travel Cards, 24%
Multi-Purpose
Cards, 22%
Remittance, 14%
Other, 6%
Axis Bank, 39%
ITZ Cash, 22%
ICICI Bank, 16%
Others, 23%
Major Players
o Axis Bank is the market leader in the overall prepaid card market
o Itz Cash is the leader in the multipurpose cards segment and also the largest firm in non-bank category for prepaid cards
Regulatory Environment
o Current regulations benefit the banking players as non-banking players are not allowed to issue open-loop prepaid cards
• Non-banking institutions can only launch semi-closed prepaid cards which cannot be used at ATMs or at bank counters for cash withdrawals
~5% of the multi-purpose segment is accounted by gift cards
Market Segmentation
41
Source: BCG Report on Prepaid Cards Market, ATOS Worldline Industry Survey on Indian Payment Card Industry (2011), VRL Report on Indian Prepaid Cards Market (2011)
Strictly Confidential
Prepaid Cards: Current Usage & Future
42
Close Ended Semi Close Ended Open Ended
Traditional Uses
Calling Cards Mobile refill coupon Gift Vouchers Fleet/Fuel Cards
Meal Coupons Gift Vouchers
Travelers' Cheque
Modern Uses
Virtual Calling Cards DTH Subscription Toll Cards Transit Cards Online Gaming Cards
Online Services Mobile Services Gift Cards Food Cards
Travel Cards Payroll Cards No-frills A/c Card
Future Uses
Government Payments Virtual Toll & Transit Gift Cards Health Cards Insurance
Virtual A/C Retail Payment Multipurpose Toll Multipurpose Transit Hybrid Cards
G P R Cards Govt. Reimbursements Hybrid Cards Cobranded/White-
label
Strictly Confidential
Emerging Opportunities and Challenges
Potential Opportunities in the Indian Prepaid cards market
• With government’s focus on financial inclusion and adoption of prepaid cards across various sectors like education, tourism, transit ticketing, the segment is poised to witness robust growth
• Recently RBI doubled the maximum prepaid card limit to INR 1 lakh stored value
Public sector: One of the potential opportunities can be the use of prepaid cards for paying wages in government welfare schemes like NREGS
• Governments in most of the major developing economies are beginning to use prepaid cards for making payments such as payroll, unemployment benefits, pension payments, disability benefits, disbursements and food vouchers
43
Challenges
• Awareness about prepaid cards is still at a very nascent stage which creates adoption barriers
• Scalability of such instruments is an issue for non banking entities as distribution reach is one of the major determinants of success
• Long gestation period due to large initial investment in establishing reach
• Regulatory challenges as no retailer can on its own have a prepaid card without partnering with a bank
• Escrow requirements and eligibility to issue various type of cards presents a challenge for non-bank players
Strictly Confidential
Aurum View on Cards Segment
44
Debit Cards to
Show Robust Growth
Debit cards are the foundation on which growth prospects of other sub-segments hinge
The historical growth momentum (30% annual growth) is expected to sustain with more population served by banking services and government’s focus on financial inclusion
With growing middle class and disposable incomes, Aurum believes transaction value over cards will increase non-linearly
This is expected to benefit all the related segments including ATMs, PoS, Payment Gateways, Mobile Wallets etc.
Government usage of prepaid cards in implementation of welfare scheme will be a key determinant of growth
High initial investment, user reluctance and RBI restriction on open loop cards to affect growth of non-bank entities, ItzCash being the only scalable player
Cards segment is dominated by Banks with some of the processing as well as reporting activities being outsourced
Increased focus by banks on getting the customers to transact outside the branch, saving costs
Increasing Transaction
Value
Prepaid Cards to
Grow,
Albeit Challenges
Segment Dominated
by Banks
Strictly Confidential 45
6 SECTION Electronic Payments Market
Strictly Confidential 46
Large Value Settlements & Online
Payment Gateways
Strictly Confidential
Electronic Payments – Overview
Payment Mode NEFT/RTGS, ECS (Credit)
Service Provider
Users
Business Transactions Collections Retail Payments
Electronic Payments Market in India
ECS Debit E-Commerce
o 161 banks enabled with NEFT facility
o 177 members enabled with RTGS facility
o 91 ECS (Credit) centres managed by RBI and other public sector banks
o NEFT/RTGS: Used for inter corporate money transfers of significant size
o ECS (Credit): Used by Banks/ Government entities to make monthly salary payments
o 90 ECS (Debit) centres managed by RBI and other public sector banks
o Used for payment of utility bills like telephone and electricity
o Leading online payment gateways include CC Avenue, Citrus, Emvantage
o Leading payment aggregators include Bill Desk and Tech Process
o Used for making online retail purchases
47
Source: Analyst Reports
Strictly Confidential
Transaction Volumes and Values (1/2)
NEFT Transactions
FY Number of Transactions (in million)
Aggregate Transaction Value (in US$ billion)
Average Transaction Value (in US$)
2008 13 28 2,108
2009 32 50 1,567
2010 66 82 1,235
2011 132 188 1,419
2012 226 358 1,584
2013 394 483 1,228
2014 994 1,062 1,069
ECS (Debit) Transactions
FY Number of Transactions (in million)
Aggregate Transaction Value (in US$ billion)
Average Transaction Value (in US$)
2008 127 10 77
2009 160 13 84
2010 149 14 93
2011 157 15 94
2012 164 17 103
2013 177 18 102
2014 213 25 119
National Electronic Funds Transfer (NEFT)
o This is a nation-wide system that facilitates electronic transfer of funds from any bank branch to any individual, firm or corporate in the country
o There is no value limit on the amount that can be transferred through NEFT
Trend
While the aggregate value for NEFT transactions has grown at a CAGR of 83% during 2008-14, the average transaction value has declined at a CAGR of 11% during the same period
Source: RBI
Electronic Clearing Services (Debit)
o This mode is largely used to collect periodic or repetitive payments from a number of customers
o There is no value limit on the amount of individual transactions
Trend
The aggregate and average value for ECS (Debit) transactions has grown at a CAGR of 9% and 8% respectively during 2008-14
48
Strictly Confidential
Transaction Volumes and Values (2/2)
ECS (Credit) Transactions
FY Number of Transactions (in million)
Aggregate Transaction Value (in US$ billion)
Average Transaction Value (in US$)
2008 78 17 199
2009 88 20 221
2010 98 24 240
2011 117 36 310
2012 121 37 306
2013 122 30 241
2014 127 43 337
Electronic Clearing Services (Credit)
o This mode is used for making bulk or repetitive payments to a number of beneficiaries
o There is no value limit on the amount of individual transactions
Trend
The aggregate and average value for ECS (Credit) transactions has grown at a CAGR of 17% and 9% respectively during 2008-14
E-Commerce Market in India E- Commerce: Key Trends
o In just 5 years, e-commerce market has grown fivefold from US$ 2.5 billion in 2009 to US$ 13 billion in 2013
o India boasts of the third largest Internet user base globally, estimated at 213 million in 2013 and expected to reach 564 million by 2020
o Combination of a large user base and low penetration is resulting in high growth for e-commerce in India
o Indian e-tailing market is expected to follow Chinese footsteps, growing to US$ 60 billion by 2020
49
Source: RBI, Analyst Reports
213 261
324
564
2.2 3.9 7.2
60.2
0.0
20.0
40.0
60.0
80.0
0
200
400
600
CY13 CY14 CY15 CY20Internet Users (mn) E Tailing (US$ bn)
Strictly Confidential
Major Payment Gateways
Leading Companies
Company Name Credit Cards supported
Investors
CC Avenue Visa, MasterCard, Amex, Diners, JCB None
Citrus Visa, MasterCard, American Express, RuPay Sequoia, Econtext Asia, Beenos Asia
Emvantage Visa, MasterCard, American Express, RuPay None
PayU Visa, MasterCard, Maestro, American Express, Diners Club
Backed by Nasper Group
Direcpay.com Visa, MasterCard, American Express, Diners Club Backed by Times of Money
EBS Visa, MasterCard, Maestro, American Express, Diners Club, JCB
Backed by France based Ingenico
Atom Visa, MasterCard, Maestro, American Express, Diners Club, JCB, RuPay
Backed by Financial Technologies Group
First Data (ICICI) Visa, MasterCard, RuPay NA
HDFC Visa, MasterCard, Diners Club, RuPay NA
50
Source: Aurum Research
Strictly Confidential 51
Mobile Wallet
Strictly Confidential
Mobile Wallet: A New Way to Pay
52
Source: Aurum Research
Prepaid instruments that involve the holder paying in cash for a corresponding amount of credit to be “loaded” onto his mobile
Stored credit can then be used for the purchase of goods and services or for the transfer of funds
Lack of awareness and skepticism around the new concept
High marketing costs to create a consumer brand of trust
Low entry barrier resulting in wafer thin margins
Stringent policies on restriction of cash-out facility
Alternate channels of money transfer and other applications
Challenges
M-Wallet market estimated at INR 3,500 mn in 2014 and is estimated to grow 3 fold to INR 12,100 by 2019
Rapid growth expected on the back of increasing demand for smartphones and rising mobile internet users (92% growth in 2013)
Alternate to existing prepaid cards and traditional ways on online payments
38% market share accounted by money transfer businesses, followed by recharge at 30% and bill payments and utilities at 12%
Size and Growth
Strictly Confidential
Market Players
53
Source: Aurum Research
Company Description Investors
Oxigen Services Limited Recharge, bill payments, ticketing, insurance and banking services Microsoft
ZipCash Card Services Pvt. Ltd. Online shopping, utility payments, DTH, mobile recharge, m-vouchers, gift vouchers
NA
One Mobikwik Systems Pvt Ltd Mobile recharge, DTH, data cards, Utility bills, shopping Unnamed Investor
My Mobile Payments Limited Mobile/ DTH Recharge, utility bills (like electricity and gas), airline, bus and movie tickets
Calpian
Citrus Payment Solutions Easier checkout on variety of online shopping points. Credit, debit, bank account can be linked to citrus account
Sequoia, Econtext Asia, BeenosAsia
CanvasM Technologies (Mahindra)
Mahindra's M-VAS venture NA
Airtel M Commerce Services Airtel Mobile wallet venture NA
Atom Technologies Ltd Payment solutions over web, IVR, mobile, mobile wallet and prepaid cards Financial Technologies
MMP Mobi Wallet Payment systems Ltd
100% subsidiary of Tata Teleservices. Transfers, shopping, utility bills etc. NA
Idea Mobile Commerce Services Ltd
Idea mobile wallet venture NA
Mobile Commerce Solutions Ltd (Vodafone)
Subsidiary of Vodafone. Product called MPesa NA
One97 Communications Ltd (PayTM)
Entire spectrum of mobile shopping and digital products Alibaba, SAIF
PayMate India Ltd Variety of payments and transfers to merchants/ beneficiaries; Multiple access channels like SMS, IVR, Smart & Feature phone applications, NFC, USSD, and mobile web
Lightbox Ventures
Strictly Confidential
Aurum View on Electronic Payments (1/2)
54
Online Payment
Gateways:
To Lead Growth
Online payment gateways form the back bone of the e-commerce revolution that we are witnessing
Aurum expects transaction volumes to grow exponentially as more users transact online
Although existing large players are better positioned to take advantage, there is scope for newer players offering better customer experience and related features
Segment will continue to attract investor interest with existing players leading large ticket size fund raisings
Aurum believes mobile to be the focal point of the current ‘Internet Revolution’
Nascent stage of the industry and low customer awareness are some of the challenges to be overcome
High marketing budgets to build a trusted consumer brand will result in 2-3 players dominating the market (Paytm, MobiKwik)
Business and ECS (debit/credit) transactions are driven by banks, with solutions provided by non bank entities
Aurum believes it to be a bank dominated domain with minimal role for non-bank payment companies
Payment Gateways:
Continued Investor
Interest
Mobile Wallet:
A Segment to
Watch Out
Large Value
Settlements:
No Play for
Non-Banks
Strictly Confidential
Aurum View on Electronic Payments (2/2)
55
Loyalty: An Upcoming
Segment
Loyalty programs in payment products is emerging as a high growth segment, attracting investor interest
Banks placing large importance to loyalty to maintain customer stickiness
Loylty Rewardz is a dominant player controlling over 60% of the market in cards loyalty programs
Global loyalty players are also eyeing India to participate in this nascent high growth market. Aimia signed an exclusive contract with Axis Bank to manage its rewards program
Payment solutions represent an important allied activity for e-commerce companies. Aurum believes e-commerce players will acquire well run payment companies to develop in-house capabilities
Aurum believes it to be a bank dominated domain with minimal role for non-bank payment companies
Consolidation on
the Cards
o Increasing shift towards online is expected to result in high growth for this segment
o In-line with government’s vision to move towards ‘cashless’ economy
o Aurum expects large number of software product start-ups to come up in this space, resulting in increased fund raising activity
Strictly Confidential 56
7 SECTION Payment Banks: Aurum View
Strictly Confidential
Payment Banks: Moving towards Financial Inclusion
57
Source: Aurum Research
No frills banks where people can open current and savings accounts but the balance can't exceed INR 1,00,000
Banks can issue ATM and debit cards but not credit cards, and they can't give loans
Targeted to provide payments and remittance services to a migrant workforce and low-income households
Can become a Business Correspondent of another bank and provide all products that BCs can offer
Can undertake other activities such as distribution of mutual funds, pension products, insurance products etc. subject to RBI approval
To invest minimum 75 per cent of its "demand deposit balances" in Government securities/Treasury Bills with maturity up to one year
Hold maximum 25% in current and time / fixed deposits with other scheduled commercial banks for operational purposes and liquidity management
Revenue from investment income in securities and transaction fees
Overview Applications to RBI and Major Players
RBI released final guidelines for Payment Banks on Nov 27, 2014 and last date for applications was decided as Feb 2, 2015
A total of 41 companies applied for the license. Some large names being:
— AB Nuvo Limited (with subsidiary Idea Cellular)
— Airtel M Commerce (with Kotak Mahindra Bank)
— Cholamandalam
— Reliance Industries (with SBI)
— Vodafone
— Tech Mahindra
— Videocon D2H
— ItzCash
— FINO Paytech
— Citrus Payments
— One Mobikwik
— Oxigen(with RBL Bank)
— Future Group (Probable partner IDFC)
Strictly Confidential
Success Stories and Aurum View
58
Global Success Stories
M-Pesa
— Mobile payments service launched in 2007 by Safaricom (Vodafone owns 40% ) in Kenya has been a runaway success
— Over US$1 billion monthly money transfers through M-Pesa in Kenya with nearly 13 million customers. In Tanzania, 5 million people do transactions worth US$ 1.5 billion
— Both Safaricom and Vodacom (Vodafone owns 65% ), the mobile operators offering it in Kenya and Tanzania, earn about 20% of revenues from it
Aurum View
Telecom players with ready distribution reach in partnership with banks are best positioned to capitalize on this opportunity
New business model has concerns about profitability and competition from alternate channels/ other players
High volumes, low transaction size model to require best use of technology for cost efficient operations
Attracting deposits might not be easy as Payment Banks will compete with Commercial Banks which can offer higher savings rates (already present in rural areas with Jan Dhan Yojana)
Brand building and customer education to require large upfront investments
Aurum has a positive long term view on the segment as Commercial Banks struggle to match the reach and low cost structures that these new entities might offer
Strictly Confidential 59
8 SECTION Past Transactions
Strictly Confidential
Transactions in Payment Services: Aurum View
60
Source: Aurum Research
Payment services has gone through a subdued period in terms of investment activity in the last 2 years, with intense competition resulting in wafer thin margins
Most investments have been focused on specific segments including ATMs, M-PoS and Payment Gateways
Companies have not performed as per investor’s expectations and exits have been few. Only Prizm Payment transaction provided a healthy exit for the existing PE/VC funds
Large corporate houses have preferred to build businesses organically as opposed to acquiring an existing player, due to high valuation expectations
With the new government at centre and renewed investor sentiment, the space has already started generating more buzz in investor circles
Segment-wise Aurum view:
— ATM: To see large ticket size fund raisings. Existing players to scale up
— PoS: M-PoS to generate investor interest. Two players, Ezetap and M Swipe to absorb majority of funding
— Cards: Loyalty to be a segment to watch out for. Interest in prepaid cards dependent on govt. initiatives
— Electronic:
o Payment Gateways: Online Payment Gateways to attract maximum interest. Larger players, e-commerce/ payment companies might look for acquisitions
o M Wallet: Top 2 players to dominate the market and attract investor interest. Smaller players might get consolidated
Strictly Confidential
Private Equity Transactions (1/4)
61
Source: Aurum Research
S No. Date Company Investors Amount (US$ mn) Segment
1 26/11/2014 PayMate India Lightbox Ventures I 30.0 Electronic
2 13/10/2014 Financial Software & Systems
PremjiInvest 57.2 ATM
3 02/09/2014 ItzCash Card Unknown Investor 15.0 Cards
4 07/07/2014 TranServ Private Limited India Evolving Fund,Nirvana Venture Advisors
3.7 Cards
5 21/03/2014 Innoviti Embedded Solutions
HNI Investor 1.0 Electronic
6 21/02/2014 Ezetap Mobile Solutions Helion Advisors ,Berggruen Holdings Inc
7.3 POS
7 08/01/2014 Mswipe Technologies Axis Bank Limited,Matrix Partners India Fund II
NA POS
8 19/12/2013 Electronic Payment and Services
Asia Participation BV (Affiliate of FMO)
5.3 ATM
9 09/12/2013 Citrus Payment Solutions Sequoia Capital India,econtext Asia,Beenos Asia
5.5 Electronic
10 11/10/2013 BTI Payments ICICI Venture 19.3 ATM
11 19/08/2013 Electronic Payment and Services
Aavishkaar India NA ATM
Strictly Confidential
Private Equity Transactions (2/4)
62
Source: Aurum Research
S No. Date Company Investors Amount (US$ mn) Segment
12 15/04/2013 Transaction Solutions International
CX Partners 22.5 ATM/POS
13 04/04/2013 Synergistic Financial Networks Private Limited
SIDBI 0.7 POS
14 10/01/2013 Mswipe Technologies Private Limited
Matrix Partners India 0.8 POS
15 07/12/2012 Fortune Payment Solutions
Bessemer Venture Partners,Kae Capital
0.3 Electronic
16 21/11/2012 MobiSwipe Technologies Private Limited
One97 Mobility Fund NA POS
17 07/11/2012 Ezetap Mobile Solutions Private Limited
Peter Thiel,David Sacks,Chamath Palihapitiya,Nicolas Berggruen
3.5 POS
18 05/10/2012 Electronic Payment and Services Private Limited
Aavishkaar Goodwell India Microfinance Development Co. Limited - II,Aavishkaar India II
4.0 ATM
19 22/08/2012 AGS Transact Technologies
Actis Capital LLP 39.6 ATM
20 17/08/2012 Beam Money Private Limited
Gray Ghost DOEN Social Venture Cooperative
0.9 Financial Inclusion
21 10/08/2012 Vortex Engineering Tata Capital 9.9 ATM
Strictly Confidential
Private Equity Transactions (3/4)
63
Source: Aurum Research
S No. Date Company Investors Amount (US$ mn) Segment
22 08/06/2012 Citrus Payment Solutions Private Limited
Sequoia Capital India 1.6 Electronic
23 04/04/2012 IndiaIdeas.com Clearstone Venture Partners,TA Associates Advisors Private Limited
22.0 Electronic
24 03/04/2012 My Mobile Payments Calpian Inc 0.6 Electronic
25 12/01/2012 Zaak ePayment Services Sequoia Capital 0.5 Electronic
26 10/01/2012 FINO PayTech International Finance Corporation NA Financial Inclusion
27 15/12/2011 Vortex Engineering Aavishkaar India 6.5 ATM
28 01/08/2011 Ezetap Mobile Solutions Sequoia Capital India 8.3 POS
29 11/07/2011 Eko India Financial Services
Creation Investments Social Ventures Fund I,Promus Equity Partners
5.5 Financial Inclusion
Strictly Confidential
Private Equity Transactions (4/4)
64
Source: Aurum Research
S No. Date Company Investors Amount (US$ mn) Segment
30 07/07/2011 FINO PayTech Blackstone Advisors 33.0 Financial Inclusion
31 07/07/2011 Vortex Engineering International Finance Corporation 2.7 ATM
32 09/06/2011 AGS Transact Technologies
TPG Growth 32.3 ATM
33 29/03/2011 Prizm Payment
Axis Private Equity Limited (fund),Sequoia Capital India,Saama Capital India Advisors LLP
7.7 ATM/POS
Strictly Confidential
M&A Transactions
65
Source: Aurum Research
S No. Date Company Investors Amount (US$ mn) Segment
1 13/10/2014 Cobboc Private Limited (Eashmart)
Payu Payments Private Limited NA Electronic
2 09/09/2014 ISS - Cash Management Uni
SIS Prosegur Holdings Private Limited
24.9 ATM
3 19/05/2014 ElectraCard Services Private Limited
MasterCard Inc,Mastercard Incorporated
NA Electronic
4 21/03/2014 Ezetap Mobile Solutions Private Limited
American Express NA POS
5 03/03/2014 C-Sam (India) Private Limited
Mastercard International Inc - Electronic
6 26/11/2013 Prizm Payment Services Private Limited
Hitachi 246.1 ATM/POS
7 04/05/2012 TimesofMoney Limited Network International LLC - Remittances
8 23/09/2011 E-Billing Solutions Private Limited
Ogone Payment Services - Electronic
Strictly Confidential
1. Digital India: Emerging Challenges & Opportunities for the Banking Sector, Indian Banks Association
2. Mobile Payments And Mobile Banking In India: Regulatory Developments And Challenges, Majmudar & Partners International Lawyers
3. India Internet Sector, Credit Suisse
4. Indian Payment Industry – 2012, Edelweiss
5. Data: Reserve Bank of India, National Payments Corporation of India
Bibliography
66
Strictly Confidential
Aurum was established, as a mid-market focused; transaction oriented; investment banking firm, by a team of professionals with
decades of experience in investment banking, private equity and general management.
Aurum advises clients on M&A, Divestitures, Fund Raising and Restructuring, focusing on sectors that are in the high-growth
trajectory. The Aurum team’s experience in handling large and complex transactions helps in accelerating the speed of response
that the Client needs to demonstrate, in order to close transactions in a competitive environment. We have the ability to structure
deals derived from understanding the client's strengths and constraints, further enabled by understanding of market trends and
relevant regulatory environment.
www.aurumequity.com
For any further queries and information, please write to us at ritikasingh@aurumequity.com
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