ITZ Cash is claimed to be one of the largest players in the online money transfer business and recognised by National Payments Corporation of India (NPCI) for its initiatives. Managing Director, ITZ Cash, Naveen Surya sees immense opportunity in payment segment. Surya, in an interaction with Poulami Chakraborty of Elets News Network (ENN), talks about his strategies to expand business in India
ITZ Cash came into being in the year 2007. How has been the decade long journey? In this phase of around nine years, our journey has been full of excitement. Being in the BFSI sector itself is a privilege to witness plenty of new developments every single day. Payments can be simply compared to an unexplored ocean being such a large industry and consumer payment market value is as huge as 2 trillion US Dollars and the electronic part of this entire system is approximately 1.04 per cent. Even today, approximately 97-98 per cent of the entire payment system still happens in physical cash. Thus, the opportunity area in payment segment is huge and still there are so many market sectors like grocery, cabs and chemists among others where there is involvement of cash payment-consciously or unconsciously.
The problem lies in the fact that people like us who provide access to electronic payments are represented by less than 10 per cent in the entire country. However, the interesting fact lies in the fact that the spending propensity of the market is increasing rapidly and having stiff competition with China; thus the 2 trillion USD market is expected to go up to 8 trillion USD. Hence, in the past few years, we have emerged as the leader in digital payments, largely for the middle class people who are not having access to debit or credit cards. So these lots use our products to make payments for a variety of purposes like- DTH recharge, utility bill payments, purchase of train tickets and mobile recharge. Besides, the RBI has recently allowed wallet brands for money transfer business, which is precisely how one transfers money from online wallets to bank accounts. There are large numbers of immigrant people in the country who do not work in a fixed place, not having permanent address and keep moving. Hence, availing banking services becomes difficult for them, however, back home their dependents have bank accounts and mobile wallet comes to use here. ITZ Cash is one of the largest players in the online money transfer business and has been recognised by the NPCI for our initiatives.
What has been the role of ITZ Cash role in the e-commerce growth?
The e-Commerce industry can be broadly categorised in three segments— travel, utility and e-tailing. E-Commerce in travel has grown significantly in the past few years. When we tried roping in with IRCTC, they were already accepting debit/credit cards. We entered and expanded the market to approx 12 per cent, even to people who do not use any debit/ credit cards, thus empowering and enabling a new set of customers.
Again we are also the largest player in the utility payments and recharge sector with largest found usage for paying electricity bill, DTH recharge, and mobile bill payments and recharge in Delhi, Mumbai and other cities.
E-tailing sector, in fact is growing very rapidly in the last few years. And the sector is focusing on top 10 per cent of the customers who are very active on it, with a steady and rising competition with varied customer requirements. Our first initiative with an e-tailing site is with Flipkart, through a co-brand store, facilitating same benefits, but here, we market the products to our customers. Thus, we do endto-end operation, starting from acquiring customers, processing request, collecting payments and if required we do provide delivery of products. Similarly, we recently started working with Uber, penetrating two cities as of now, Nagpur and Chandigarh.
2 trillion USD Consumer payment market
Poised to touch 8 trillion USD
e-payments amount to a meagre 1.04 percent
ITZ Cash’s first initiative with an e-tailing site is with Flipkart
We pioneered the concept of multipurpose prepaid wallet payment which can not only collect money for Dish TV payments but also can be used for utility and travel settlements
When ITZ Cash forayed into digital payments, one of its most initial moves was to associate with DTH services, with Dish TV. Kindly elaborate the idea behind the move?
There was no concrete idea behind the move. During that time, Dish TV was the first company to introduce satellite based services in the market and the reason was very clear that they wanted to introduce distribution of content industry out of the unorganised market into the organised market. Out of the same process, it’s been observed that the government has also benefitted- as the local cable operators leaves no scope to track or validate the number of households he is supplying the cable network services and the entire revenue can be termed as ‘Black Cash’.
Dish TV here channelised and routed a huge amount of revenue to the government besides organising a content market. The moment the revenue from the DTH market is collected by a company, automatically all text-compliance happens. They thus took it to revolutionise the whole market and converted it to organised market from unorganised sector of operation, thus, emerging as one of the biggest players in the market.
The challenge for them has been that while, they deliver content through technology, who will go and collect the money from users every month. They here wanted to keep a transparent process of collecting moments, unlike what happens with local vendors, who have vested interest of keeping a percentage for themselves every month. With our experience in payment services for 15 years, they asked us to design a product where telecom service revenues can be collected and channelised on a pre-paid basis. So we designed the whole concept on a prepaid model and a later can walk into any retail outlet to collect a coupon, as it used to be in the initial days.
Thus, we had the opportunity to create a digital product, where people can store money and pay, a distribution point where people can load their money. Hence, we pioneered the concept of multi-purpose prepaid wallet payment which can not only collect money for Dish TV payments but also can be used for other utility and travel settlements.
Around 97-98 per cent of the entire payment system still happens in physical cash. There is sea of opportunities in payment segment
Currently, ITZ Cash has a significant share for online travel booking, especially with IRCTC. How do you propose to reach to more and more people?
This is a continuous process for the entire economy and the government for the next 10-15 years and all the banks and their solutions like debit and credit cards hardly penetrate 3 to 4 per cent of the entire economy. For example, we keep comparing ourselves to China for any particular reason when it comes to compare growth. China is also one of the largest users of physical cash and has moved ahead a lot at present; thus, this three per cent penetration of digital payment in the economy has to move ahead to at least 5 to 7 percent in the next 3 to 4 years.
To maximize our reach among people we adopt a few models. Firstly, we expand our geographical presence by expanding in each and every region of the country. Secondly, we involve more and more business centers of ITZ CASH in the Tier II cities to involve more and more customers with our product line. Thirdly, we increase our product line besides being an online wallet company like remittances, money transfer, utility payments etc.
What have been the key roadblocks for ITZ Cash expansion in Tier II or tier III cities?
Technology infrastructure was major road block that we faced when we started our journey in this sector specifically in Tier II or Tier III cities, besides the connectivity issue that is constantly evolving with time. Secondly, the education of people on money handling through some online wallet appeared as a major hurdle to overcome for us. They would not have felt it safe to operate through some online channel regarding payment of their utility bills and other services. It was a major challenge that we faced to win over their trust and confidence on online payment system over physical presence.
Thirdly, the biggest hurdle is our fight to establish that cashless payment and purchase is more and more reliable than physical cash usage.