Payment Gateways like Citrus Pay, Innoviti and PayUMoney, have hopped on the lending bandwagon to help their existing network of merchants and small business owners swim up the value stream. The micro, small, and medium enterprise (MSME) segment, or the ‘missing middle’, with a hunger for capital typically relies on the organized lending market for secured or unsecured loans. Payment companies, on the other hand, sit in the middle of every transaction, and are privy to a lot of data on these merchants and their growth metrics.
Bangalore-based Innoviti, which is backed by Narayan Murthy’s Catamaran Ventures, this month took its credit distribution pilot a step further and launched smelending.com, a marketplace for connecting small business buyers, large manufacturers or sellers to these buyers and lenders who are interested in extending credit to such buyers.
“We are sourcing borrowers from sellers in our network (wholesaler or dealers), and this brings down lead generation costs and, therefore, loan cost goes down. It opens up an opportunity for small ticket size loans,” said Rajeev Agrawal, CEO, Innoviti. The company’s other product, uniPAY, an omni-channel payment platform, has customers including Reliance Retail, Titan Company (including Tanishq) and Landmark Group.
Similarly, Naspers-backed online payment gateway company PayUMoney tied up with digital lending platform Lendingkart and launched Lendingkart Grow, an initiative to provide working capital loans to SMEs.
For Mumbai-based Citrus Pay, which partnered with peer-to-peer lending platform Milaap four months ago to introduce Citrus Cash App, the initiative had two prime intentions – one to prove a crowd-sourced model to microfinance; second, an effort to increase its portfolio of services and move more people to digital money.
And the overarching reason for this trend is a need to increase margins and build profitable businesses.