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BharatPe’s Revenue Model: How Do They Make Money?

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Ashneer Grover (left) and Shashvat Nakrani

During the pandemic, BharatPe, which was launched in 2018, became extremely popular among shopkeepers and small businesses. At the time, no payment app charged less than 1.5 percent in transaction fees. BharatPe took advantage of the situation and made transactions completely free, transforming them into an app used by millions and making them a household name. Many company owners who needed to do huge transactions on a daily basis switched to BharatPe. The app now has over 7.5 million active users.

Ashneer Grover, co-founder and CEO of BharatPe says “Small shops in India solve hundreds of problems. But the shopkeeper has to borrow from friends or loan sharks for capital as banks won’t give him a loan as he has no papers,”.

BharatPe co-founder Shashvat Nakrani adds, “During my IIT days [around 2017-2018] I was working on a startup. It is then that I identified a huge problem faced by merchants/SMEs—the challenge of accepting payments digitally without losing out on margins. No payment gateway or wallet was taking less than 1.5% commission. Moreover, awareness of the UPI system was practically zero. That’s when it struck me that we should be leveraging UPI to remove all charges on payments, build a network of merchants, and monetise through other financial products,”

BharatPe has created an artificial intelligence (A.I.)-based system that detects numerous signals—such as the type of transactions a shopkeeper does, their use of other goods on the platform, and so on—and provides them with information on the cash flow of their company. To create a loan offer, this information is combined with the merchant’s lending history and credit score. The fintech firm’s NBFC partner executes the loan and funds the merchant’s account in a few days for a willing shopkeeper. Everything is done digitally, with no hassles and, perhaps most crucially for the store, no collateral.

BharatPe piloted its merchant-focused QR code at Nehru Place, a commercial hotspot in New Delhi, in June 2018. In the first month, over 1,000 merchants signed up, attracted by the interoperability feature and, more crucially, the free transaction costs. Grover claims that retailers would demand on cash merely to avoid transaction costs, as they operate on 15% margins.
The company’s merchant and consumer lending solutions generate most of their income. Within three months of its inception in October 2021, its BNPL product PostPe has a TPV of $321 million.


Image via Money Control

Speaking on how they set themselves apart from their competition, Grover says, “We have chosen to be on the merchant side which ensures that you don’t have to burn too much cash to maintain a base of consumers. Second, we started monetisation very early, because when you lend, it doesn’t create friction in your main business. It works as a flywheel,”.

“We compete with the top five companies in the world by cash reserves: Walmartbacked PhonePe; Alibaba-backed Paytm; Facebookbacked WhatsApp Pay; Amazon-backed Amazon Pay; and Google-backed Google Pay. You can’t win by capital; you can only win by innovation, proposition, execution on the ground, and servicing of the merchant.” he adds.


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