Merchant payments and financial services provider BharatPe has acquired multi-brand loyalty platform, PAYBACK India, to help its 6 million offline merchants roll out rewards and loyalty programmes for customers.
The acquisition is expected to give an exit to American Express and ICICI Investments Strategic Fund, which hold 90% and 10% stake respectively in the entity. PAYBACK India will continue to function independently, after the acquisition.
The deal is expected to be worth $30 million, an individual aware of the discussions told Mint on condition of anonymity. It also marks BharatPe’s first acquisition since its inception in 2018.
With this deal, BharatPe, which has traditionally been powering payments and providing credit and other financial services to offline merchants, enters a consumer-facing business.
BharatPe will now also provide digital credit to customers and launch ‘Buy Now Pay Later’ (BNPL) services on the PAYBACK platform. PAYBACK India’s customers can also redeem their loyalty points and BNPL services at offline stores through the BharatPe quick response (QR) code.
PAYBACK India’s management will continue to run the platform and report to BharatPe’s group president, Gautam Kaushik, who joined the company in February. Before joining BharatPe, Kaushik was the managing director of PAYBACK India. Kaushik, BharatPe’s second group president, Suhail Sameer, and general counsel Sumeet Singh, will join PAYBACK India’s board as a part of the transaction.
“Through loyalty points, PAYBACK India has established a strong currency with customers in the last 10 years. With the acquisition, we will power up the currency and make it redeemable at even offline stores, which wasn’t the case earlier. This makes PAYBACK India’s proposition more relevant,” Ashneer Grover, chief executive officer and co-founder of BharatPe told Mint.
“This acquisition also gives us access to strong base customers that we can underwrite to provide credit. Lastly, PAYBACK India ecosystem will allow our merchants to even roll out loyalty programmes for their customers,” Grover said.
The customers will be able to use their credit line to pay offline through QR codes, Grover said. PAYBACK’s platform will also offer unified payments interface (UPI) payments, allowing customers to make digital transactions at stores, he said.
In the next six months, BharatPe plans to help 500,000 merchants on its platform to roll out loyalty programmes and work as redemption points for customers. It plans to launch its BNPL offering to customers by the end of July.
PAYBACK India has enrolled more than 100 million users till date. It has an active monthly user base of almost 8 million customers and records an annual revenue run rate of $25 million.
“PAYBACK India continues to be profitable and a $25 million revenue run rate will also keep it self-funded, which makes it a more exciting proposition for us,” Grover said.
Over the past year, BharatPe has doubled down its focus on its credit operations and was lending upwards of $20 million on a monthly basis to offline merchants before the second wave of the covid pandemic hit the country.
It has disbursed close to $225 million in credit till date and has an outstanding loan book of $100 million. Through its QR codes, BharatPe processes payments worth $10 billion on an annual basis and expects it to reach $30 billion by FY23. It also plans to raise $500 million in debt capital by FY23 to fund its credit operations.
The company wants to end the current financial year with 10 million merchants. It also wants to double its annual revenue run rate to $200 million by the end of this fiscal year.
Earlier this year, the startup also teamed up with the Centrum Group to submit a joint expression of interest to the Reserve Bank of India to take over the assets of the distressed Punjab and Maharashtra Cooperative Bank.
