One of the early entrants in the digital payments space was ItzCash, set up in 2006 as a subsidiary of the Essel Group by Ashok Goel of Zee and former Dish TV executive Naveen Surya. ItzCash was launched as a prepaid cash card and a semi-closed wallet service — customers could use it to make payments through a mobile app, on the internet or through IVRS. “Many tech-based companies such as Rediff and Indiatimes were facing issues with customer payments because the latter didn’t have credit or debit cards. We, meanwhile, were launching a technology product [Dish TV set-top boxes]. So, we thought that if customers could walk into retail outlets and top up a prepaid account in the form of a wallet or prepaid cash card, it would solve the problem of making payments without plastic currency,” says Surya, managing director of ItzCash.
The first add-on service the company launched all the way back in 2006-2007 was in partnership with Indian Railways — railway tickets could be bought using ItzCash’s wallet service. The company introduced franchisee outlets where customers could go and book tickets in real-time through SMSes. Next came the option of booking bus and air tickets and hotel accommodation. Then came a tie-up with Reliance Energy in 2008-2009 for ItzCash customers to pay their electricity bills easily. Finally, the company moved on to offering mobile recharges. In 2010, it created a close-ended card for Amway India, where the latter’s dealers could order goods from an online kiosk and collect them from its offices. This drastically reduced the cash handling charges for the firm and about 90% of its Rs.2,200 crore-odd revenue now gets done through ItzCash.
The real game changer for the company came in mid-2013, when the RBI permitted online wallet companies to enable customers to make payments to any bank account. For ItzCash, this translated into a huge addition of nearly 50 lakh customers, chiefly migrant labourers who wished to send remittances home, over a period of 18 months. On a monthly basis, this translates into Rs.900 crore-1,000 crore of remittances, or around 20 lakh transactions for ItzCash through money transfer — done through an instant mobile payments service (IMPS) platform — alone. In rail ticketing, it has a market share of 12-15%; in utilities, including credit and debit card payments, of about 10-15%; and in bank-to-bank remittances, 10-12%. The company plans to get into financial technology partnerships with regional rural banks, microfinance institutions (MFIs) and new smaller banks — it will offer them its in-built IT platform and distribution. It also plans to get into the $70 billion international money transfer business, where 30-40% of remittances are withdrawn as cash.
While its promoters have infused Rs.60 crore into the venture, the company has raised $20 million from Lightspeed, Matrix Partners and Intellecap. How exactly does it make money? Well, for remittances, it charges the consumer a fee; for all other transactions, the merchant is charged a fee. This fee is levied on a per transaction basis and ranges between 1.5% and 2%. “96% of transactions in India today still happen in cash. This is our real competition, as well as a sizeable opportunity for us,” says Surya. ItzCash now has 105 million wallet users, 35 million of them active ones. In FY15, the company achieved Rs.7,500 crore of payment volumes (the total payment by customers using a company’s total services) and is expected to cross Rs.12,000 crore in payment volumes by the end of the current financial year. The company’s revenue is around Rs.200 crore and, according to Surya, it is close to breaking even. Excluding the new initiatives, he expects an average growth of 30% for the next three years.