Imagine having to pay for your cab or the lunch you order at work, at the end of the week or month, like you do for your postpaid mobile connection or other utilities. That is what PayU is trying to achieve through its credit business. The digital payment services company offers consumer credit through its deferred payment facility LazyPay, and is piloting Monedo, an instant loan product.

Besides that, the Naspers-owned company that closed its loss-making wallet business earlier this year, is also investing in smaller fintech companies. Last week, it invested $11.5 million in fintech player PaySense.

Fortune India spoke to the company’s India CEO, Amrish Rau, who believes mobile wallets are dead, and says PayU wants to grow its credit business and invest in smaller companies. Edited excerpts:

It has been an eventful year for PayU, you shut down your wallet business, and are focussing on the credit business. There has been a big change in PayU’s strategy, do you think it is because the digital payments landscape has changed?

Today, so many companies believe that since they do so many transactions for the consumers, they need to start building a relationship with the consumer. But they don’t understand that for a consumer it doesn’t matter what the payment infrastructure behind getting a transaction done is. We believe that digital payments in general are going to increase all over the world. The migration from cash-based transaction to a digital transaction is a secular transaction and that is never going to get reversed. So, we want to focus on powering every possible payment transaction that happens.

We don’t want to own consumer loyalty at this point of time when it comes to payment transactions. There are companies like PayPal and Paytm, which want to own the consumer. They are trying a very hard approach. We have taken a different approach; we don’t care where consumers keep their money. But when you want to make a payment, we want to be the ones to facilitate that. Instead of going to the consumer we have gone to the merchant. We power almost 50 – 55% of all e-commerce transactions in India. We process almost Rs 10,000 crore on a monthly basis on our payments platform, and that translated into us making about $100 million of revenue in 2017-18.

Secondly, we think India is starved for credit. And we think that Indian consumers could spend a lot more if they are given a great credit experience. If we can merge that with our core payments business, we think we could be a powerhouse on the credit side.

Tell us more about the decision to get into the credit business

We want to treat our consumers slightly differently. If I know my consumer, and if the consumer uses the same usual number and email, I won’t ask them for their credit or debit card details. I want them to complete their purchase, and give them the option of paying within the next 14 days. This allows a faster payment and we don’t charge the consumer for the transaction, but the retailer. This also helps the retailer have higher conversions.

Also, because of this credit product we have got 10-15 million consumers, and we have started to study their behaviours in terms of how they are utilising our small credit and whether they are paying back or not. On back of this analytics, we are also providing instalment-based credit to these consumers.

Why did you get out of the wallet business?

We think that the consumer is not going to take the pain to take their money out of their bank account and move it to a third party like a wallet to do a payment transaction. In both Citrus Pay (the company that Rau founded, which was bought by PayU) and PayU, we were very quick to junk the whole wallet concept. As time has moved, what has been proven right is that not just are consumers not moving money into the wallet but with the advent of UPI, money resides in your account and you still get a wallet-like experience.

Wallets in general are dead as of now.

You are competing with both fintech and credit card companies in the new business. How do you plan to manage that kind of competition?

When it comes to fintech, we have the tremendous power of data. Today we get 1.5 million payment transactions everyday. We have a very good understanding of the consumer, what card does he have in the wallet, what kind of merchant sites does he do his transactions on. Other fintech companies don’t get to see such large volume of payment transactions, and they don’t understand the consumer, and they can’t understand whether the consumer is credit worthy. We have a big advantage because of our payments business.

Second are credit card companies, we don’t want to necessarily go into the credit card space. We want to facilitate credit. If we provide credit to a consumer just when he is about make a payment transaction, there is a higher likelihood that they will use your services.

What’s next for PayU, what is in the pipeline?

The growth that we have had on the credit side, we want to continue that. I think for something like PayU and Naspers, the Indian fintech scenario is extremely exciting. We today are in a position, where we want to make commit further to the Indian market, and want to create an ecosystem around fintech. And we will continue to make significant investment into the Indian fintech ecosystem in India. We would like to keep investing in the emerging fintech companies in India

What are the challenges that still persist in the digital payment ecosystem?

Consumers need simple messaging. Today what we have is a multitude of voices trying to influence the consumer right from UPI, to net banking, Aadhar payments. The consumers are confused. The messaging has to become simple and clear. Once that happens, digital payments will take off. We also have to make the effort to go to those people who want to be communicated with in local languages. Digital payments is still a very English driven adoption. With the proliferation of data in the country, knowledge levels will go higher. Payments companies will have to be ready to communicate in local languages.

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