“The Times They Are A-Changin”

Announcing our investment in Mintoak

India’s digital payments story has been one to behold — with increasing smartphone penetration, access to formal banking (via Jan Dhan) and low-cost rails in UPI, the explosion has been dramatic. UPI alone has grown from less than $1B in TPV to over $300B in just 3 years. A huge driving force for this adoption has been the excellent cadre of consumer facing payment apps — Paytm, PhonePe and Google Pay, who through a combination of seamless connectivity, slick UX and incentives have permanently changed user behavior.

The macro remains promising on the back of government supplementing the digital infrastructure and incentivizing digital payments by driving down fees. Historically, the banking system catered only to large corporates and individuals with good credit scores. Elevated costs prohibited banks reaching out to masses. Technology has radically shifted this equation and is likely to bring down the cost of providing financial services significantly.

While digital payments are quickly becoming the status quo on P2P and online transactions, the offline merchant payments ecosystem remains fraught with challenges. On the one hand, you have archaic PoS infrastructure for cards — that is expensive and just not feasible for merchants. On the other hand, you have the low cost QR codes and UPI players — who while having onboarded millions of merchants, have engaged in a sticker war — further complicating the life of the merchant.

In our conversation with merchants, three clear need gaps came through:

• Merchants are seeking a single unified payments platform across methods
• They want transparent pricing and a seamless interface to understand their business
• They are on the lookout for tools to not only manage, but empower their business operations — as the look to thrive and not just survive

Mintoak solves for exactly this. When we first met the team, we were immediately enthused by their vision of equipping every merchant with a mobile first, omni-channel payment solution and smart value-added services. The platform allows for payment acceptance through debit cards, credit cards, SMS payment link, Bharat QR, UPI, payment wallets and cash recording — all with a single Android based platform. The product further gives merchants clear visibility into their payment history, fees and settlements. Merchants also gain access to a range of value-added services like generating digital receipts, customer engagement and customer analytics.

Moreover, the team was able to identify that banks play a crucial role in the payments ecosystem and have onboarded several leading banks as their go-to-market partners. Banks share a unique relationship with merchants, since they offer a plethora of services — with payments being a small, yet critical sliver. Mintoak’s strategy and mindset reflects the team’s deep experience in payments and banking — veterans who understand both sides of the aisle and are committed to improving merchants lives.

India is home to 40 million merchants and 12 million Kirana stores — with a vast majority in the unorganized sector, with cash being the predominant form of payments — because of the aversion to non-cash transactions and of course, the absence of payments infrastructure. In the current climate, digital payments and commerce have shifted from a nice-to-have to a bid for survival — a key imperative which could redefine their existence. While difficult to accurately pinpoint the impact of Covid-19, we believe that the digitization of SME’s is going to take center stage, and that Mintoak is well positioned to bring the promised deliverance.

We are super excited to partner with Raman, Sanjay and Rama in this journey.

“The Times They Are A-Changin”

Sources: Morgan Stanley Research, NPCIL, Pravega Analysis