PAYMATE INDIA IPO

Paymate India Limited is leading5 B2B payments and services provider that digitizes, automates, and streamlines B2B payments in supply chains and a pioneer in the digital technology based B2B payment services market. (Source: RedSeer Report) It was the largest B2B payments player and one of the fastest growing providers of on-line, card-based payment-processing services in India, in terms of TPV processed in the nine months ended December 31, 2021, using commercial credit cards. (Source: RedSeer Report). According to the RedSeer Report, the company is one of the first fullstack supply chain payments automation platform in India for enterprises and their supply chain, which offers commercial credit cards as a payment instrument, GST, direct tax and utility payments, vendor payments (accounts payables), collections (accounts receivables), automated reconciliation, and invoice discounting (early payment discounting) and invoice financing. Paymate India Limited’s platform provides solutions to enterprises such as credit checks, vendor payments, utility payments and tax payments with automated processes. It has also launched the PayMate App thereby extending the reach of its platform, for ease of use and access to commercial credit cards.

Paymate India Limited’s platform’s reach increased from 39,318 Users and 335 customers as on March 31, 2019, to 116,858 Users and 49,953 customers as on December 31, 2021. It generally acquires new customers through its business development team to develop business relationships with prospective Enterprise customers and SME customers and its relationships with commercial banks where the company is able to market to the business banking customers of these banks. The company has relationships with three financial institutions. Once a customer is onboarded on to the platform, it aims to cross sell its various services across the platform to ensure customer retention. It has a competitive advantage over other technology enabled and traditional B2B payment solutions providers because of its understanding of the payment processing needs of different types of enterprises from multiple verticals within a supply chain and real-time integration with its customers’ system.

In order to service the needs of its customers, Paymate India Limited maintains relationships with commercial credit card issuing banks in India. Its relationships with these banks allow the company to extend its customer base alongside the growth of the commercial credit card industry. It enables it to reach more customers, with needs to make and receive online payments. These banks and financial institutions, with which the company has relationships, account for 50% of all credit cards issued in India in fiscal 2021 (Source: RedSeer Report). The key financial institutions it works with include SBI Cards and Payment Services, ICICI Bank and another leading private bank in India. In addition, the Company has a long-standing relationship with Visa, and Visa is also a shareholder in the Company. It ensures that commercial credit cards processed through its system are only Visa cards for certain international territories agreed with Visa.

Paymate India Limited designed and built its platform using its in-house technology that enables it to connect its customers with their vendors and integrate with banking platforms. The company’s platform is scalable and provides the capabilities and flexibility to process front-end payments and back-end reporting and settlement transactions for closed supply chains, which consist of the same group of actors in a closed loop series of transactions. Its platform also gives them insights into the way enterprises operate their businesses. This gives the company the ability to develop and provide solutions to its customers and their vendors and suppliers using its technology enabled platform. Its platform learns autonomously from the behavior of its customers on the platform to enhance its service offering. The company’s platform has competitive advantage to launch and upscale efficiently through simple integration with its customers’ systems.

Given the volume and value of transactions conducted on its platform, mitigating risks and security are core elements of its systems. The control, data collection and data analysis capabilities of Paymate India Limited’s network and technology platform have enabled it to develop a strong security infrastructure to retain its customers and financial institution partners and to attract prospective customers and financial institution partners. Further, its platform provides its financial institution partners with access to its platform, which enables them to determine the credit score of counter parties based on information in the documents that the company collects during the knowyour customer process when it onboards new customers to its platform. The company has implemented fraud prevention measures in line with the prevailing industry practices for systems and cyber security. Its fraud risk management framework includes identifying, measuring, managing, monitoring, and reporting of fraud risks.

Ajay Adiseshan (Chairman and Managing Director):He holds a bachelor’s degree in science (electrical engineering) from University of Colorado Boulder, USA. In his current role in the Company, he is, among others, responsible for strategy, planning and growth of the Company along with cultivating and maintaining investor relationships. He is also responsible for leading product innovation and overseeing the Company’s functionalities to reach its targets.
Monica Niranjan Doshi (Monica Niranjan Doshi):She holds a master’s degree in commerce (external) from University of Bombay and a post-graduate certificate in human resource management from Xavier School of Management.
Vishvanathan Subramanian (Whole-time Director and the Chief Financial Officer):He holds a bachelor’s degree in commerce from University of Bombay and is a qualified chartered accountant. In his current role in the Company, he is, among others, responsible for collaboration between various department across the Company to ensure synergy in operations. He manages the operational, financial and risk management activities along with overseeing the legal and financial compliances of the Company.

The company operates in a regulated industry and are subject to evolving laws and regulation governing its business. In particular, if the company is unable to obtain the authorization from the RBI pursuant to the Payment Aggregators Guidelines, its business may be adversely affected.
Its largest customer and its top five customers (other than its largest customer) contributed 20.68% and 43.50% of its revenue from operations for the nine months ended December 31, 2021, respectively. Any loss of business from one or more of them may adversely affect its revenues and profitability.
The company is reliant on its contracts and arrangements with Visa Inc. in respect of B2B digital payments solutions and any disruptions of its relationship with Visa or termination of its contracts and arrangements will have an adverse effect on its growth prospects
The company relies on its financial institution partners to facilitate digital payments for its customers, and any failure to maintain its relationships with them or disruption in their services could have an adverse impact on its business.
Certain statutory and regulatory licenses and approvals are required for conducting its business and any failure or omission to obtain, maintain or renew these licenses and approvals could materially and adversely affect its business
* For complete list of risk factors kindly refer to the Draft Red Herring Prospectus.

If it is unable to maintain competitive pricing of its products and services or maintain low customer acquisition costs, we may not be able to attract and retain customers
The company has a history of net losses and have experienced negative cash flows in previous Fiscals. It needs to generate and sustain increased revenues while managing its expenses to achieve profitability, and its inability to achieve these goals may have an adverse effect on its business
The success and growth of its business depends upon its ability to innovate and develop new products and services. Failure to innovate and develop its products and services could have an adverse effect on its prospects

Tax payments made by corporates in India can give rise to approximately USD 248 billion of payments opportunity and are increasingly digitalized, accelerated by a government push.
B2B utility payments are an approximately USD 80 billion market in Fiscal 2022. B2B payment market in India and GCC countries amount to approximately USD 12 trillion in 2021 and is expected to become approximately USD 17 trillion market by 2025.

If it is unable to attract new customers to its platform, retain and grow its relationships with its existing customers, and increase transaction volumes processed on its platform, its business and financial condition could be adversely affected
Its international expansion efforts may not be successful or may subject its business to increased risks.
A decline in the use of commercial credit cards as a payment mechanism for customers or adverse developments with respect to the payment processing industry in general could have a materially adverse effect on its business.

Paymate India Limited aims to exploit the network effect created by the addition of every user and customer on its platform. The company aims to achieve this by leveraging its existing Enterprise customers and SME customers and financial institution partner relationships to grow its SME customers and users. Once a large enterprise is on-boarded on to its platform as a customer, the company aims to bring the vendors, suppliers, buyers, dealers, and distributors of customers on to its platform as SME clients for their vendor payments, GST and direct tax payments, thus resulting in a cascading effect of organic growth of its platform. SME customer acquisition is further bolstered by extending its platform to business banking customers of its financial institution partners.

According to the RedSeer Report, global commercial payments volume was estimated at approximately USD 134 trillion in 2021. RedSeer estimates that India has approximately USD 8 trillion of the global commercial payments volume, CEMEA, approximately USD 10 trillion and AsiaPacific estimated at approximately USD 58 trillion. This presents Paymate India Limited with an opportunity to exploit this latent demand and enabling these SMEs to access credit and funding using its platform. In addition, the company is also focused on diversifying the industry sectors of the customers that it targets. According to the RedSeer Report, its wide suite offerings to enterprises, such as payment automation and dashboard support, drive superior engagement as compared to other peers. The company’s focus across industry sectors has enabled it to expand from a historical concentration in the travel and airline industry segment to other sectors of the economy.

Paymate India Limited has commenced operations in the UAE during the current fiscal year, through PayMate LLC and plan to further expand in the UAE. It has also established PayMate India SPC, a subsidiary in Oman, during the current fiscal year to develop and expand in Oman. As on December 31, 2021, PayMate LLC on-boarded 3 customers of different industries. The company aims to expand into CEMEA, which has a large B2B payment market of around USD 10 trillion in 2021 according to the RedSeer Report, in the future. It plans to continue to expand its presence in the APAC region through partnerships, in particular Southeast Asia and Australia. The company aims to leverage its existing customers in India with global operations to expand its offering to their offices in other geographies. This will further allow the company to attract new customers to its platform in these geographies.

Paymate India Limited aim to expand its presence in India by targeting potential customers across India. As it adds SME customers through its enterprise customers and its financial institution partners, its customers are now based out of multiple cities and towns. The company has designated a team for sales and marketing functions. The strategic regional focus of its sales and marketing network enables it to target SMEs by virtue of bank reference and customized solutions. Further, the company intends to cross sell additional solutions in the platform to its users. As the company utilizes data analytics to gain deeper insight to the needs of its users through their behaviors on its platform, the company can understand usage patterns, identify service and solution gaps and improve its offerings to create an overall better experience for its users.

Paymate India Limited intends to deepen its engagement with its existing customers by increasing the adoption of the invoice discounting and supply chain credit offering that we provide through its financial institution partners. This would lead to increased customer transaction volumes through its platform and deepen relationships with its customers, which would also allow it to provide customized solutions to such customer’s vendors, suppliers, buyers, dealers, and distributors. Increasing its presence in the existing supply chain ecosystem will allow it to expand its offerings, increasing overall revenues for it and providing customized solutions that have higher margin offerings.

Although Paymate India Limited are primarily focused on growing its business organically, it may selectively pursue strategic acquisitions to enhance its competitive position, improve its operations and expand its business. The company may choose to acquire new technologies, expertise, volume and capabilities, enter new market segments or enter new geographies

Leveraging on its connection with the Issuing Banks, Paymate India Limited can expand its reach to other clients of the Issuing Banks. As on December 31, 2021, the company has relationships with three financial institution partners, namely SBI Cards and Payment Services, ICICI Bank and a leading private bank in India, to issue commercial credit cards to customers and are seeking to deepen its partnerships with these financial institutions.

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