7 highlights
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That’s the state of fintech currently. With RBI’s policy changes on one side, small players burdened with compliance cost, bigger players getting next fund and getting into new segments, the market is in utter chaos
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First, RBI’s new guidelines on regulating payment aggregators and payment gateways are expected to make it tough for smaller online payment processors to continue, on account of stricter compliance and capital requirements. This means the larger processors such as PayU and Razorpay can snap them up to grow their shares of the market;
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Second, the merchant acquiring business, especially offline—which had earlier lost investor interest—has become hot again. “Acquiring” refers to the B2B side of payments, or the companies that “acquire” and onboard merchants; the term spans physical retail (with point-of-sale, or PoS, terminals and QR codes) and online payment gateways.
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Had Razorpay’s talks with Innoviti moved forward, however, it would have gained a large offline business. Innoviti’s customers are mainly retail chains, with Reliance Retail being a big client. This, though, can also be a disadvantage, given that Reliance Industries—the parent of Reliance Retail—had entered the PoS business with JioPoS, which admittedly appears to have been on the back burner for a while now.
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“O2O”, short for “offline-to-online”, was once a favourite buzzword for some e-commerce companies. The idea was to tie up with sellers who could operate both online and offline, wherever the customer was. That strategy largely faded away with the decline of Paytm Mall.
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Both “offline-to-online” and “online-to-offline” seem to be defining strategies for Indian payments companies today. The other major shift, as we mentioned above, is from acquiring to issuing and vice versa.
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On the other hand, another payments major Pine Labs—which has converted itself into a public company ahead of a US public listing targeted sometime soon—first made its entry on the consumer side with the acquisition of gift card company Qwikcilver for $110 million in March 2019.