PayU India planning to expand credit business

Bengaluru: Payments firm PayU India plans to expand its credit business to tap increasing demand among consumers for credit to purchase a range of items from bus tickets and food to mobile phones and electronic goods.

PayU also wants to double its monthly transaction volume to roughly $2.5 billion in its core business—PayU Money, its payment gateway service—by March 2019, chief executive Amrish Rau said in an interview.

PayU provides consumer credit through two products—LazyPay and Monedo.

LazyPay, which is used by food ordering apps, bus and movie ticket platforms, medicine delivery firms and others to offer credit to consumers, plans to increase its daily transaction volume to more than 60,000 transactions from 15,000 currently, Rau said.

“Consumers are looking for faster checkouts in small tickets transactions. So all our merchants who sell small-ticket items are very interested in adopting LazyPay. So, for example, food delivery transactions on LazyPay are increasing really fast. We’ve done one million transactions since launch and the delinquencies have been less than 5%; so it gives us a lot of confidence to expand faster,” Rau said.

Monedo, which was launched last month to provide credit to consumers on high value purchases, will expand at a slower pace.

“We want to see what the delinquencies are before going big on Monedo. We’re slowly opening it up to OTA (online travel platforms), airlines and e-commerce companies,” Rau said.

Expanding its credit business is one of PayU’s big bets this year.

Apart from its own credit offerings, PayU has a minority stake in Zest Money, a Bengaluru-based consumer credit start-up.

Several start-ups have received funding from investors in the past 18 months to tap the growing demand for credit.

Start-ups such as MoneyTap, Faircent, EarlySalary and others are helping expand consumer credit at a time when banks burdened by bad loans have become cautious about lending.

Apart from expanding its credit business, PayU wants to grow its core payment gateway this year, partly by signing up the large numbers of government agencies and education institutions that are going online for the first time or increasing their digital presence.

PayU, which competes with Pine Labs, BillDesk, CCAvenue and others, is betting on direct integration with banks and slick technology to gain market share.

“Because of our push to directly integrate with banks, our transaction success rate has improved by 4-5% points. Most payment gateways have a success rate of 80% on average. After integration, our success rate has gone up to 85%, so that’s helping us a lot with customers,” Rau said.

In September 2016, PayU, the digital payments provider owned by South Africa’s Naspers Group, bought rival Citrus Pay for $130 million in an all-cash deal.

Rau, a co-founder of Citrus, became CEO of the merged entity, while another Citrus founder Jitendra Gupta became managing director at PayU Indialivemint