Using mobile payments to empower micro-merchants

Hot 100: Race to Grace winner ftcash is an app that enables offline transactions quickly by aggregating all payment gateways for ease of business. By Shweta Gandhi

Founded in June 2015 by Vaibhav Lodha, Sanjeev Chandak and Deepak Kothari, ftcash is a smart way of paying your local vendor using an app. It provides seamless solutions for micro-merchants and small businesses to accept payments through multiple payment instruments including credit cards, debit cards, and mobile wallets (like Paytm and Mobikwik). So, the next time you’re running out of cash, simply brandish your mobile phone to pay.

Vaibhav Lodha has done his engineering from NIT Trichy and went on to pursue Executive Education at the Harvard Kennedy School of Government. He worked as a consultant for The World Bank and was a director at XPRIZE. Vaibhav handles the business development and alliances departments at ftcash. Co-founder Sanjeev is an engineering graduate from IIT Kharagpur and has an MBA in Finance from The Wharton School. He worked for seven years with Deutsche Bank India as their Dy. CFO before joining Ftcash where he looks after the product side. Their partner Deepak Kothari comes from a commerce background. He graduated with honours from SRCC, Delhi University, and is a CA by profession. Deepak was a senior manager at KPMG before starting Ftcash, where he works on the operations. The trio are backed by a team of 36 people. Vaibhav tells us more about the startup.

How the idea came about
Living in Mumbai, Vaibhav often dealt newspaper, milk and vegetable vendors all at the doorstep of his home. Though he appreciated the home deliveries, he wasn’t too happy on the days he didn’t have exact change and the vendor couldn’t return the difference. This led to a cycle of credit, which Vaibhav realised was hampering the vendor’s cash flow. “That’s when I realised that there could be an easier way of exchanging the amount, and ftcash was born,” says Vaibhav.

How it works
The app aggregates payment gateways for micro-merchants to be able to accept debit, credit card or mobile wallets without the use of any additional hardware. ftcash focuses on the underserved sector, and allows customers to make payments at their favourite restaurants, retail outlets, car service centres and even vegetable vendors. “Our USP is that people can use the app without even downloading it,” says Vaibhav. “Through the use of a unique link, the customer can pay the vendor, and the vendor will receive a SMS saying that the amount has been transferred to their bank account.” There’s also an option for vendors to raise an invoice. “The vendor doesn’t need to have a smartphone or be tech savvy—he can still use the service,” says Vaibhav.

This service is a flexible and easy payment option in the fintech market, with its niche focus on targeting micro transactions. No more constant trips to the ATM! More importantly, the app also provides financial capital for the micro-merchants who are usually not serviced by banks. Based on their transaction history, offline vendors can be sanctioned loans through ftcash’s partnership with NBFCs (Non-Banking Financial Company), which serves as a value-added feature.

Business model and growth rate
ftcash earns from every transaction made. So far, there have been over 60,000 transactions made using the app, grossing up to more than Rs 14 crores. “80 per cent of those transactions are based in Mumbai, because that’s where we have a majority of our micro-merchants,” says Vaibhav. “When a merchant starts using the app, others around him start adapting too, and soon, the entire area is using ftcash.” That’s how they’ve grown at an astonishing rate of 10x with the app being downloaded 20,000 times. Furthermore, around 10,000 people are using the app’s services on a monthly basis. The other source of revenue is the interest earned from the loans, which ranges between 18-25 per cent, dependant on the loan amount. Till date, ftcash has given 25 loans, ranging from Rs 50,000 to Rs 5,00,000, to micro-merchants.

“Being incubated by PayPal supported us in a major way as it provided a big backing,” says Vaibhav. They’ve been recognised on many platforms and even won the HOT 100: Race to Grace 2015 award. Ftcash has received funding from IvyCap Ventures and several marquee international angel investors, signalling that they are on the path to success.

Challenges faced
“Trust was the most difficult to build,” says Vaibhav. That’s quite understandable, given that the app is about money. “We had to sit with vendors and explain to them step-by-step how the app worked. We had to promise it was all safe, and, slowly, they became more comfortable to it once they started using it.” Yet another challenge was recruitment. “Building the right team was the most important, so that they could go in to the market and approach vendors,” Vaibhav says. Since the main marketing angle was through the merchants itself, reaching out was crucial. “It worked when the pull came from the merchants, who would tell their customers about the app.”

Plans for the future
After being awarded by Prince William and Kate Middleton as a Winner of UKTI Great Tech Rocketship Program and having scored their first round of funding, the company has enough capital to last for the next year. “We will now make sure we are able to scale massively by focussing purely on business. We also have a goal to reach 100,000 micro-merchants by March 2018,” says Vaibhav. The app is just a year old, but already it’s making its presence felt and making people’s lives easier one transaction at a time. 

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