March 06, 2023

Pine Labs sees 3x rise in monthly transaction volumes since getting payment aggregator licence

Merchant commerce platform Pine Labs has seen a 3x rise in the number of merchants onboarded on a monthly basis, and a similar rise in monthly volumes since getting the regulator’s nod for a Payment Aggregator licence, its chief executive officer Amrish Rau told CNBC-TV18.
The comments assume significance as Pine Labs, which only entered the payment gateway space in October 2020 with its offering “Plural”, has seen a significant increase in volumes on its platform. This follows a ban on its rivals Paytm, Cashfree, PayU and others from onboarding new customers after their PA licences were returned by RBI.
“Businesses want to connect to our platform, because we are not just a sturdy payments business, but because we are also one of the most compliant ones,” Rau told CNBC-TV18.
“Payments is a very responsible business, and working very closely with the regulator and regulatory guidelines is extremely critical..We have worked very hard over many many years to build a platform that conforms to what Reserve Bank of India wants to see..So we are quite delighted to be among the first few that have got the PA licence, it is a big responsibility,” Amrish Rau told CNBC-TV18 in an interview.
Disadvantage Competitors = Advantage PineLabs?
“The number of merchants we are boarding on a monthly basis has actually gone up 3x, our volumes have gone up 3x on a monthly basis. We are almost getting to about a billion dollars of payment volumes on a monthly basis now,” Rau said.
Pine Labs was among a clutch of fintechs to get a PA licence from RBI. A Payments Aggregator license, allows companies to provide payment services for merchants (online businesses or e-commerce firms) by accepting payment instruments from customers.
A total of 185 fintechs and startups have submitted their applications for a license to operate a payment aggregator to RBI. So far, the regulator has granted an in-principle approval to 32 entities to operate as an online payment aggregator (PA), including Pine Labs, Google Pay, Amazon and others, rejected applications of 4 players including Paytm, Freecharge, and PayU, barring them from onboarding new merchants until advised otherwise. Another 28 applications are still under review.
“Look some of those (players) have to realise that RBI or any institution connected to the government, wants to ensure consumers are protected, money is under the control of the right set of people, and they will have to up their game to work in a very compliant manner,” Rau said, without naming any of the rival companies.
Pine Labs Business Outlook
Pine Labs closed FY2023 with over USD 200 million in annual revenues. When asked which verticals contributed most the revenues, Rau told CNBC-TV18, “We now have a fairly diversified revenue contribution..Today less than 30 percent of our revenues come from the classic terminals business.. Almost 20 percent of our business is now coming from global markets… We think our tech is relevant to the South East Asian markets, and Middle Eastern markets.. The remaining 50 percent revenues come from various software services we provide – issuing, instalment payments, online etc.”
Rau said the types of transactions at check-out counters have increased over the last few years, and Pine Labs’ devices are solving for that on the offline side. However, Rau said, a completely new set of consumers are getting into online payments now, and that’s where he sees the opportunity for the next leg of growth. “While PineLabs will be known for terminals at a Reliance or DMart or Chroma, we are also doing the same in the online space now…The whole wave around bill payments and BBPS is fantastic; we are now the second largest BBPS transaction processing company in India.”
When asked what Pine Labs would be known for, Rau said they “have the responsibility of building a fintech which the world will want to look at, and that business has to be strong in one space which is payments for us..Our payments biz will be online and offline, but we also want to be in the consumer space with cards.. We want to issue cards, because we want to close the loop between consumers and merchants,” he told CNBC-TV18.
More Acquisitions In the Pipeline?
Pine Labs acquired at least 4 startups in the last 12 months alone.The acquisitions were aimed at diversifying its revenue across software and value-added services, apart from its legacy payment and point-of-sale terminals businesses. So it acquired four fintech startups in the past year, inlcuding Qfix, Mosambee, Setu, and Saluto Wellness. And this trend may continue.
“I am a firm believer that M&A, strategic partnerships are extremely important for a company to grow..Liquidity around the world has tightened up, so M&A can be a significant play for scale in a company.. We do see ourselves doing more consolidation in the payments & fintech space,” he told CNBC-TV18.
Valued at over USD 5 billion, Pine Labs raised close to USD 1.2 billion in the last 12 months. While there is no need to raise more money to run the business, according to Rau, Pine Labs will require capital if it is to acquire more companies.
 IPO Plans
“We raised about $1.2 billion in the last 12 months, so purely in terms of money to run the business- we have enough. But for the company to continue to make acquisitions, partner with other players, it is important for us to have funding and IPO is a key piece for that.”
Pine Labs is also looking to go public to give its investors an exit. The fintech unicorn is backed by Sequoia Capital, Temasek Holdings, Actis, PayPal and Mastercard among other leading global investors.
“We also have investors who have been with us for a long time who’d want to see our shares become easily tradable.. At the right time, we will go out to the markets. Global markets are at a difficult position as we speak.. We also need to figure at what scale and size we will be appreciated by investors not just in India, and the global market,” Rau said.
While the fintech was contemplating a US-listing, its plans may change. Rau said it would depend on the existing conditions at the time the company decides to go public. “I used to say, for an IPO or exit to happen, the stars have to line up; difficult to say when that will happen,” he said.