With the advent of the internet & advanced payment technologies, the process of receiving, transferring payments & storing bills, has been easier than ever. The online payment gateways & aggregators industry has been estimated to be growing with a CAGR of 9.18% over the estimated period between 2020-2026. While the payment gateway industry was valued at $446.9 mn in 2017 it is further estimated to grow to $1,708.1 mn by the year 2025.
Due to this, it has become crucial for businesses & start-ups to have a system of online payment gateways. Irrespective of the kind of business being run by a business, it is an indispensable need for almost every business to have a payment gateway to boost its business performance and scale its business growth. If you are still wondering why? Because another study has proved if the customer does not find their preferred payment options on the checkout pages as more than 25% of them may abandon their sites and go to competitor sites. Therefore, a start-up needs to offer all flexible options that are trending, and it is only possible if the business has an online payment gateway in India.
If you think carefully, there are many benefits associated with payment gateways. They allow the merchants to process credit, debit, and other alternative online payments and reduce the possibilities of the frequency and severity of credit card frauds within e-commerce or any other kind of business. It also acts as the go link to ensure that the customer data is secured & encrypted.
Talking of payment gateways, one of the top names that come into mind is BillDesk, which is also known as the pioneer of payment gateways in India. BillDesk is an Indian online payment gateway company with its headquarters in Mumbai, India. It provides payment solutions to its customers in the banking & financing businesses, e-commerce start-ups, and others and customers while accounting for almost 60% of the online bill payments in the country.
In the year 2018, after receiving total funding of a nearly $300 million investment by Visa, BillDesk achieved its Unicorn status and became the 16th start-up to achieve the status. It currently holds a net worth of $2.5 bn as of September 2021. On 31st Aug 2021, Billdesk finalized the acquisition deal with PayU which is owned by Prosus, a Netherlands-based business for a whopping sum of $ 4.7 bn, which is considered to be one of the biggest deals happened in the history of the Fintech Industry in India, and the start-up is waiting for regulatory approval from the Competition Commission of India.
BillDesk- About & Start-Up Story
M.N. Srinivasu, Ajay Kaushal & Karthik Ganapathy, were three employees working in Arthur Anderson in 1999, when they altogether thought that it was the right time to leave their jobs and start their entrepreneurial venture and spent their first 90 days ideating about their start-up and incorporated their first company Indiaideas Com Ltd in March 2000.
In the 2000s, India had not seen or even known about the internet and there were lesser than 50,000 internet users at that point, with no sign of anything digital happening in India. Amazon was limited to the USA and Google was at its early stage of development. They knew that technology-related financial services are going to be massive in the future and they had enough background to feel confident about creating something related to it. Around 2003, they jointly founded an online payment gateway Billdesk that collaborates with merchants (such as banks in the beginning) to facilitate services to its customers to receive and pay bill payments, and to view & store their bills) from anywhere in the world. Slowly & steadily the business evolved as the dominant way users view and pay bills from their banks, kiosks, and customer apps, those changed over time. Since then, this online platform continues to be the largest payment gateway in India that has created Internet-based payments products that enable consumers to make payments online in a hassle-free manner.
Bill Desk’s tagline states “Facilitating all your payments at a single location”. To date, it has served its clients & customers for more than 20 years and has leadership in services like enterprise-wide electronic payments and collections, ancillary reconciliation, and settlement-related operations across numerous delivery channels with an extensive range of payment methods on its reliable, trustworthy and secured platform.
Bill desk’s ultimate vision & goals include the creation of one –a stop destination payment destination for its customers through its innovative solutions for the simplification in collection & translation of opportunities offered by the internet into actual customer happiness through ensuring payments & receiving payments with security.
How does the BillDesk payment gateway work?
BillDesk is a one-stop bill payment and payment aggregator platform that allows customers to organize, pay and manage their regular and ongoing bills. Merchant Clients & Customers could receive, store, review, and pay the bills they receive from various providers at a single location with BillDesk. It also allows access to a market-leading stack for authentication, bill payment, and standing instructions.
Bill Desk- Founder & Team
Billdesk was founded in the year 2000, by its three co-founders namely – M.N. Srinivasu, Ajay Kaushal, and Karthik Ganapathy.
i. N. Srinivasu
M.N. Srinivasu, Co-founder & Director of Billdesk, has completed his graduation in B.com Graduation & later completed his Post graduation Diploma in Management (PGDM) from IIM Ahmedabad. He started his professional career as a Manager of Agri-Group ITC, then went on to various positions like the Financial Controller of ITC Zeneca Limited, Treasury (Financial Services) of ITC Limited for around nine years, and joined Andersen as a Business Consultant in 1999, before finally co-founding Billdesk with other two co-founders
ii. Ajay Kaushal
Ajay Kaushal, another co-founder & Director of BillDesk completed his graduation in electrical engineering from IIT Madras followed by a post-graduation from IIM Lucknow. After completing his studies, he started his career as the Head of Securities Research at SBI Capital Markets Limited, joined Arthur Andersen, and then joined CAF India as a Trustee for six years before finally joining BigBasket.
iii. Karthik Ganapathy
Karthik Ganapathy, Co-Founder & Chief Architect of the technology and operations at BillDesk, is an alumnus of IIT Bombay & IIM Bangalore and like other co-founders worked with Arthur Anderson before founding Billdesk.
BillDesk– Business & Revenue Model
Thus, BillDesk offers a platform for various online and mobile payments that could be made through aggregator platforms in India. The platform is used by various business organizations, companies, banks, and financial institutions from industries such as telecom, insurance, e-commerce, financial services, charity organizations, and media & entertainment industries. It helps the customers to organize, store, manage & make payments for any regular or recurring bills as per their requirements.
Customers could access the platform to review their payments apart from receipt & payment of funds through the payment gateway. It has provided the customers with a safe, quick, and far more efficient way of doing financial transactions.
Billdesk is hailed as one of the earliest fintech companies in India which operate on a business-to-business-to-consumer (B2B2C) model, which most payment gateway businesses do focus on these days. Initially, the business was started by creating a connection between banks with any merchant or utility for accepting payments from the customers. Interestingly, another important feature of BillDesk includes no end customer acquisition policies from its customers, which means that though BillDesk would take cuts from the merchant, bank, or utility for every transaction it facilitates, no cuts from customers using the platform in general.
The charges collected for the processing of payments for each electronic transaction account as the major source of revenue for BillDesk. Apart from this, a portion of income is also derived from the prepaid accounts for recurring settlements (PINS and e-Top up subscriptions) sold by BillDesk and further from loyalty reward point management services. Furthermore, Billdesk also draws payments from some of its ancillary & advisory services.
BillDesk- Funding & Acquisitions
Since its inception, BillDesk has raised a total sum of $241.4M as funding over four rounds. The latest tranche of payments was received on Nov 16, 2018, from a corporate round of funding. To date, BillDesk has been funded by seven investors including names like TA Associates, Clearstone Venture Partners, Temasek Holdings, General Atlantic, Visa, etc. being the most recent one.
BillDesk received its first investment from the SIDBI Venture Capital Ltd and Bank of Baroda in the year 2001, while the second one came in the year 2006 when a group of investors like Clearstone Venture Partners and State Bank of India conjointly invested $7.5 million in the business.
In 2012, the third tranche of investments came from a USA-based private equity firm that invested an undisclosed sum in the business. In 2015, another USA-based private equity firm General Atlantic & Temasek invested a sum of $200mn in the BillDesk business leading the valuation of the business to reach 1 bn. In the same year, Visa expressed its desire to expand its presence in India and invested along with Temasek Holdings for an undisclosed total sum that led the valuation of BillDesk to reach $1.53 billion, making it one of the earliest fin-tech start-up unicorns of India.
Prosus-backed fintech firm PayU is all set to acquire BillDesk business in India for an all-in cash deal of $4.7 billion. It will also cause the exit of all the seven investors General Atlantic, TA Associates, Temasek, Clearstone Ventures, and Visa from the business. Upon receipt of regulatory approval from the Anti-trust body of India, this deal will arguably be one of the largest acquisition deals in India.
BillDesk- Growth Over years
Initially, Billdesk started as a B2B model that worked through collaborations with banks and financial institutions on one side and merchants- utility companies on the other. They didn’t have to incur costs in advertisements & endorsements of their products & services, as their efficient services for one bank took praise to the other and by 2003, all of the top banks in the country had joined their platform. By, managing an extensive payments processing network, it offers payment gateway services to over 30 leading banks of India such as SBI, Citibank, HDFC Bank, etc. to strategically important businesses for the Indian economy such as LIC, BSNL, Hutchison-Essar, SBI Mutual Fund, UTI Mutual Fund, Reliance Infocomm, Airtel, Tata Teleservices, and Reliance Energy.
As M.N. Srinivasu remembers “Sometimes I jokingly, we only made our proper pitch in the year 2003, aftermath it was out testimony through word of mouth from one business to the other, and it worked out great for the business”.
From being a primary platform that enabled its users to view, store and make payments for their bills in the year 2000, it has emerged as one of the largest bill payment eco-system in the world. Currently, the BillDesk platform offers over 20,000 billers from utility bill payments, gas bills, and insurance premiums to DTH subscriptions. All these services are available across all banking platforms, websites and applications.
BillDesk also possesses one of the largest payment aggregator platforms where it aggregates various payment methods such as credit, debit cards, UPI, net banking, etc. to enable merchants to receive payments digitally. There are more than 170 payment method options to be offered to its target customers on the platform. As a result, the start-up also claims to have reached a throughput payments capacity of $100 billion in its payments gateway and bill payment business in the first pandemic year 2020-21. To expand its business operations in India, Visa also invested a huge sum into the BillDesk business that enables Visa cardholders to easily make payments at their convenience. This service is one of its kind introduced by Visa for cardholders in the Asia-Pacific region.
BillDesk- Revenues & Expenses Over years
BillDesk has been enjoying steady profits for more than one decade, however, has not revealed its actual profit figures. It saw a rise in its profits (through consolidated statements) for the year 2017-18 to Rs. 149 crores from a profit amount of Rs 138 crores in the previous fiscal year. The operating revenues from the consolidated statements reported an increase from Rs. 899.7 crore to Rs. 1102.8 crore, which is a 22.6% increase in the previous revenues. However, the expenses for the period also increased from Rs. 772.7 crore in 2016-17 to Rs. 943.7 crores in 2017-18. In FY21, Billdesk’s annual operational revenue reached Rs 2,124.2 crore from Rs 1,804.7 crore in FY20, which indicated a 17.7% increase in revenues last year.
A larger portion (around 75%) of Bill Desk’s revenues as processing fees from its online transactions which have grown enormously to reach Rs 1,593.12 crores in FY21 from Rs 1,190.3 crore in FY20, which suggests a 33.8% growth. Similarly, revenues from other business sources such as the fee from prepaid accounts for recurring settlements grew by 56.8% to reach Rs 248.5 crore during FY21 from Rs 158.5 crore in FY20 to reach.
The BillDesk Loyalty point’s management program also helped the business to grow its total operating revenue by around 11.21% in FY2, by now operating revenue declined around 43.1% from Rs 418.8 crore in FY20 to Rs 238.2 crore in FY21. Other smaller incomes like commission, ancillary, and other advisory fees made up a sum of Rs.44Cr.
Therefore, the recent growth of BillDesk in terms of growth of its revenues could be accounted to its older & existing customers who have their honesty & ultimate trust for the business throughout the years.
BillDesk Market Competitors
Some of the key market competitors of BillDesk include-
- TechProcess
- GooglePay
- Razorpay
- Paytm
- Instamojo
- CCAvenue
- PhonePe
BillDesk- Challenges Faced
Despite being the pioneer of digital payment gateways and one of the earliest fin-tech businesses in India, Billdesk also had to face some struggles & challenges and was even looking for opportunities to sell off the business which finally struck deal with PayU. However, their business journey over two decades has not been any easier. Some of those include-
i. Stiff Competition among Fintech Businesses– One of the key challenges for the business was to wade off competition as from the beginning itself, Billdesk focused lesser on business marketing and always maintained a low profile while there have been a lot of similar fintech start-ups erupted in the start-up ecosystem who have maintained their active social media presence & and are well-marketed from the beginning itself i.e.PayUmoney, Paytm, Citrus, and CC Avenue, and thus gain more customer attraction. Despite this, Billdesk managed to add an edge to the business to wade off the competition with its long-standing merchant clients & old customers.
ii. Stricter RBI Regulations for Payment Gateways & Aggregators-In 2020, BillDesk also struggled to meet its revenue targets when the Reserve Bank of India imposed stricter regulations while mandating the reduction of commission rates charged by Payment Gateways on almost all of the online transactions. However, they decided to keep going on at their own pace & deliver their services steadily and succeeded to reach a profitable margin.
iii. Need for a fully integrated system-Though Billdesk has been primarily a payment gateway, there has been an increasing appetite on the part of merchant customers & clients for a fully integrated system, and even investors also prefer fintech start-ups offering more front-end services for their customers.
BillDesk- Awards & Recognitions
For its efficient & trustworthy services, BillDesk has been recognized as the ‘Fifth Fastest Growing Company in India’ by Deloitte Touche Tohmatsu for its ‘Technology Fast 50’ (India) Award in the year 2020.
BillDesk- Future Plans
Being one of the earliest business start-ups in India, Billdesk has gone through massive changes in the industry while molding itself to the changing client needs. BillDesk offers its services to more than thirty leading banks, financial institutions, and other businesses. After its merger with PayU, it plans to scale its operations and deliver better services by bringing in automation and artificial intelligence to offer a smooth transactional experience for its customers to ultimately acquire bigger brands and more customers.
Though there have been multiple speculations regarding BillDesk trying to sell off its business multiple times in recent years, according to Mr. Srinivasu (Co-founder & Director), this was the first engagement between BillDesk & PayU, and BillDesk has neither been bothered by media speculations & coverages nor has communicated in any manner to either validate or negate the news.
When asked why they were interested in entering a deal with PayU and whether he plans to exit from the BillDesk, he stated “We were considering the IPO path for the business when we were approached by Prosus, they had an interesting offer which we believed could provide the Business the necessary backing and impetus to grow, and the right exit for shareholders who have been there for long, we decided to go for it. And unless the media wants us out, we will be there on the platform to build it.”
Therefore, being the largest business player in the bill payment & payment aggregator space, Billdesk has for years served some of the largest businesses in India and continues to add valuable partnerships with e-commerce businesses that rely on digital payments. Now, on receipt of approval from the Competition Commission of India, BillDesk will combine its synergies with PayU which already has a robust presence within SME segments, the business will be the strongest and will continue to scale in the future. In the words of Srinivasu “When you are combining two teams, you suddenly feel a larger ability to do things, as it just adds to the multiplier effect. The same is going to be the case in the contest of where Indian digital payments are and the way the market will grow from here”.
