Mswipe will merge PayU’s existing offline POS business into its existing operations. PayU had gotten into the POS business less than a year ago (in July 2016), so this is a pretty quick admission of this-is-not-what-we-want-to-do. In a statement, B Amrish Rau, CEO at PayU India, acknowledges that the focus will be on online only, saying “We are laser focused on the online space and continue to increase our market share through new fintech products and innovation. Apart from the acquisition, Mswipe merchants will be able to offer Internet payment services offered by PayU India, and PayU will push Mswipe to its merchants for POS services related requirements. Note that PayU’s online-only focus may be a function of a management change, after it acquired CitrusPay in September 2016.
With this acquisition, Mswipe will have 220,000 machines across over 550 cities, according to the company, and a combined team strength of over 2,000 employees. Mswipe says that around 80% of its customer base is SME merchants, supported by 2-3 employees, with a turnover of Rs 1-5 Lakh per month. Demonetization appears to have helped the company, which says that transaction volume on the Mswipe network has “grown 4 times while number of installations has grown 3 times.”
All in all, Mswipe has raised a total of $32 million from investors like Falcon Edge Capital, Matrix Capital Partners, DSG Partners and Axis Bank. It’s upcoming battles are likely to be will be on three fronts.
Developments in the POS space
– Merchants choosing QR codes over POS machines: the proliferation of POS machines needs wider penetration of credit and debit cards, which leads to a demand for machines to service them. But there is probably less of a challenge, when it comes to mobile phones and QR codes: As Paytm founder Vijay Shekhar Sharma once told MediaNama, “the consumer has a dumb device called card, and what merchants carry is a smart device called POS with Internet connection. So, we are changing that structure. We are saying that merchant will not have a smart device or Internet connection, and consumer will have that. So payment happens via a QR code and the processing happens on the consumer side.”
That doesn’t mean there isn’t an up-side for Mswipe here: at least in case of debit cards, a majority of them are used merely for ATM withdrawals and not merchant payments. So there is room to grow if card companies can help change behavior, which is what demonetization would have helped with.
– Aadhaar enabled POS: The RBI has mandated that all new card acceptance machines will need to have Aadhaar and biometric capabilities essentially turning all new POS machines to mini-ATMs, which essentially means that POS terminal companies will have to invest in CAPEX to upgrade/replace the machines. Mswipe recently partnered with Samsung Pay, to launch terminals which allow for NFC based payments, but we checked, and the Wisepad G2 from Mswipe (pdf) does not allow for fingerprint authentication, which is necessary for Aadhaar authentication