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Our merchant network grew by 34%, digital payments adoption grew by 250% in 2020: Harsh Pokharna of OKCredit

Digital ledger or khata app OKCredit added nearly 7 million new merchants to its network in the last year, as businesses like kirana stores and small merchants turned to digital solutions for their daily operations. “Our merchants added over 70 million new customers in 2020, their adoption of digital payments has increased by 250%,” Harsh Pokharna , co-founder and chief executive officer, OKCredit told MediaNama.

OKCredit was founded in 2017 by Pokharna , Gaurav Kumar and Aditya Prasad, three graduates from IIT Kanpur. The flagship bookkeeping app ‘OKCredit’ is one of many business software services that the company has built to help formalise small-medium businesses (SMBs) across the country. Merchants can maintain a digital ledger of all their sales and accounts, accept digital payments and also send payment reminders to customers. Soon the company’s merchants will be able to set up an online store and manage their staff payments as the company launches new verticals in the coming months.

“Just like any other business, the digital bookkeeping segment too had to go through ups and downs last year amid the Covid pandemic. Since March 2020, our user base has grown by 34% to 27 million registered merchants who come from various parts of India, a large number of which are from tier-2 and tier-3 locations,” Pokharna said. He added that thanks to the app’s availability in 9 regional languages, it can touch 95% of the pincodes in the country. The Bengaluru-based company has raised $84.2 million from major investors like Y-Combinator, Tiger Global and Lightspeed India, according to Crunchbase.

MediaNama’s interview with Harsh Pokharna , co-founder and CEO, OKCredit.


MediaNama: How has the platform performed in the last year?

Pokharna : Our business dipped 26%, 31%, and 38% in tier 3, tier 2, and tier 1 cities respectively in April last year. Things however changed with heightened business activity among the micro, small, and medium enterprise sector and rapid adoption of digital business tools among them to drive efficiency and growth.

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Our growth, in the unlock phase of the COVID-19 pandemic, was particularly strong in small towns and hinterlands and we witnessed a strong recovery in demand from tier 3 cities followed by tier 2 and tier 1 cities. At a business category level, different magnitudes and pace of recovery have been observed since February 2020. We witnessed double-digit growth in business from medical and Kirana stores at 21% and 15% respectively in September 2020. This was after a dip of 12% in business from medical stores and 22% from Kirana stores in April last year.

In terms of the total value of transactions on the platform, OkCredit captured 0.5% of India’s total GDP of $2.6 trillion in 2020. This was made possible through over 800 million transactions on the platform in 2020 amounting to $40 billion worth of transactions. Prior to the second wave, we saw an increase in both the number of transactions and transacting merchants. Compared to February 2020, our transactions were 15% higher in February 2021.

MediaNama: If we look at the digital payments ecosystem, most fintech players have burnt cash on marketing and promotional expenses. What is the primary cost centre for OKCredit?

Pokharna : Technology awareness in the small-medium business (SMB) ecosystem has been very low. Even though it’s a large market, the propensity of small merchants to adopt technology tools is lacking. There’s inertia, lack of trust and paucity of understanding to using apps that can improve their business. A lot of our resources have gone into building this awareness ground up since we were among the first ones to enter the SMB space. As we scaled rapidly, we have also spent in ramping up our team.

MediaNama: With the leading fintech payments players launching their own khata feature, does this affect your moat? 

Pokharna : India’s small and medium business space comprises 60-70 million merchants which are a large enough space for companies to compete.  In our experience, the SMB sector needs specialised focus from companies who are building for a specific kind of population, rather than a diversified approach. Our priority is to build sustainable and scalable business for long-term growth along with customer retention. Our core competence lies in understanding SMB’s needs and building for them. What differentiates us from others is the simplicity we offer to users like the option to add transactions through voice, the option to use the application in more than 9 different languages,  the ability to access their record offline and other features.

MediaNama: With several states going into lockdown, what is your strategy going forward?

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Pokharna : We have scaled up from a single product company to a multi-product company solving problems for different segments of the diverse SMB base. We identify the unique value of network effects in this and have started pursuing that towards delivering more value to them. We intend to create an ecosystem of digital solutions for small businesses to help them manage their business tasks such as digital bookkeeping, staff management besides creating an online presence to compete with more organized players. Our digital bookkeeping application has already become an integral part of small merchant’s business due to its best-in-class user experience.

Last year, we launched our innovative new solution called OkShop which allows small merchants to set up their online presence. We intend to go ahead with the full-scale launch of OkStaff this year, which is a free-of-charge staff management app that allows SMBs to manage their employees’ payments, attendance and more. Our first priority is to scale and stabilise two of our new launches.

Having said that, we are constantly listening to our customers. We are assessing the need gaps in the SMB space and based on our merchants’ feedback, will launch products only if it’s relevant to the segment. We remain focused on achieving growth through the organic route and spending nimbly to acquire new users.

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