PhonePe rolls a dice in the pay aggregator biz

livemint.com:

New Delhi: Avinash Kumar runs Blumox Technologies, a Delhi-based company that develops websites, mobile apps and applications for enterprises. For five years, he used the services of Razorpay, a payments company, for his everyday transactions with customers online. However, a few months ago, he switched to PhonePe.

At $12 billion, it is India’s most valued fintech startup today. The reason? An offer too good to pass—or so he thought. “PhonePe committed to me an offer of 1.75% transaction discount rate (TDR) on all cards and next day settlement.

I was saving almost 0.25%, which was a major factor for me to jump," he said. TDR is the fee that a merchant pays for every transaction processed using a payment gateway. The industry standard is to charge 2%.

Blumox Technologies makes a revenue of ₹5-6 lakh a month. A saving of 0.25% may appear paltry to many of us but for a small business, every rupee saved matters. In a year, Kumar can theoretically save ₹15,000.

Similarly, many other small businesses have been offered a low TDR—at times even 0%—by PhonePe. Behind these offers are PhonePe’s growing ambitions of becoming a larger, well-diversified fintech company that is known both for offline and online payments. PhonePe is currently popular for its digital wallet and online payment app that allows one to make instant money transfers with Unified Payments Interface (UPI).

However, its merchant base is almost entirely offline. These businesses use the company’s QR codes to accept payments or its point of sale (POS) devices. But Blumox Technologies is an online merchant with no physical presence.