Novopay, a Bengaluru-based payment firm is slowly disrupting the mobile wallet space by focusing to serve unbanked and rural customers.
Many of these customers, like in rural Midnapore, use their nearby Kirana store with the Novopay Solutions board as their local banking channel. Money transferred from their family members working in Delhi or Mumbai to their bank account is reflected into their Novopay wallet with the store keeper assisting them in doing transactions on a smartphone.
The local Kirana store validates the user, who receives the money with the Aadhaar-based unique identification numbers database, using biometric scanners and the smartphones. Novopay is a bank-backed account wallet with the money stored in the wallet linked to the bank account
“Everybody is targeting the 200 million middle class with a smart phone. Because they think eventually the guy will buy e-commerce goods on my wallet. We actually are targeting the 900 million people in the interiors,” says Srikanth Nadhamuni, co-founder and chairman of Novopay Solutions. “The people who are not being served by the banking sector are our target audience. Even from a business perspective, this is a huge market”.
As the chief technology officer of the Aadhaar project, Srikanth Nadhamuni, helped Nandan Nilekani build the underlying technology for the world’s largest identification project. With Novopay, he and his co-founders — Gautam Bandyopadhyay and Sridhar Rao are putting to use the Aadhaar authentication system to provide access to banking and financial services to reach out to the unbanked, where transactions can be as low as Rs 10.
Novopay has tied up with RBL, Axis Bank, IDFC and Bank of India to deliver its services to customers through the bank-backed wallet. The company has a consumer wallet and is building its user base by partnering with companies than splurging cash to get more users. IDFC Bank, which is a strategic investor in Novopay utilises the underlying software built by the company to run its banking operations.
A study by Google and Boston Consultancy Group (BCG) says Indians use digital instruments to make payments worth $500 billion by 2020, contributing to 15% of the country’s gross domestic product (GDP). By 2023, it estimates that non-cash transactions is set to overtake cash transactions as more people adopt digital channels for transacting money. Several measures such as the rise of digital wallets, payment banks and the introduction of Unified Payment Interface (UPI), which uses standards to allow seamless mobile first payments across platforms will contribute to this shift.
Novopay delivered over five million transactions last year, with users remitting an average of Rs 3,000 to their family members who have accessed them at over 44,000 outlets – Kirana stores who operate the assisted wallet to users across India. By mid 2017, Novopay aims to increase the reach fivefold to around three lakh outlets across India.
“In Ghatkopar, when we open our outlet, hundred guys literally follow into them. They all want to send money to Bihar or UP. The banks say we don’t want these guys, we want the middle class with decent bank balance,” says Sridhar Rao, CEO of Novopay. “So they were like, can you help? For us, it was how many outlets you want? Dozen outlets, no issues. Our model is so low cost — it is a kirana shop.”
The low-cost model of using kirana shops is supplemented by the underlying technology architecture built by Nadhamuni, which he says it is the world’s lightest core banking solution – with the platform allowing the company to scale user and transaction base multiple fold with little incremental cost.
“Traditionally banks and financial institutions have outsourced technology. You might have a pretty front end, but if you have a heavy CBS, whose cost structure doesn’t allow you to open accounts and maintain accounts of poor people, then it doesn’t t make sense,” says Nadhamuni. ” Even telecom companies, they didn’t build their own technology.”
Novopay has built a network operations centre (NOC), which Nadhamuni calls it the company’s Googleplex that allows every single smartphone in a kiosk being monitored for transactions and also provide support.
“We have built the entire CBS system ground up. We have built the asset management system, liability system and payment system and the entire cbs lite can handle shifts such as bitcoins. What we have built is a Googleplex than an enterprise CBS,” says Nadhamuni. ” Marginal cost of creating a new account on our platform is nothing. We built it ground up. So even if our a Rs 10 transaction, we are ok.”