, a Bengaluru-based payments company, says it is slowly disrupting the mobile wallet space by focusing on unbanked and rural customers.
Many of these customers use their nearby store with the Novopay Solutions board as their local banking channel. Money transferred from kin working in Delhi or Mumbai to their bank account is reflected into their Novopay wallet, bank-backed, with the store keeper assisting them in doing transactions on a smartphone. The local store validates the user who receives the money with the Aadhaar-based unique identification numbers database, using biometric scanners and 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 smartphone — they think, eventually, the guy will buy e-commerce goods on my wallet. We actually are targeting the 900 mn 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, Nadhamuni helped Nandan Nilekani build the underlying technology for the world’s largest citizen identification project. With Novopay, he and 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 by splurging cash to get more users. IDFC Bank, a strategic investor in Novopay, utilises the underlying software built by the company to run its banking operations.
A study by Google and The Boston Consultancy Group (BCG) says Indians will use digital instruments to make payments worth $500 billion by 2020, contributing to 15 per cent of Gross Domestic Product. By 2023, it estimates non-cash transactions will overtake those in cash, as more people adopt digital channels for transacting money. Several measures such as the rise of digital wallets, payment banks and introduction of a Unified Payment Interface, which uses standards to allow seamless mobile-first payments across platforms, will contribute to this shift.
Novopay delivered a little over five million transactions last year, with users remitting an average of Rs 3,000 to their family members, access being at through about 44,000 outlets — the local stores which operate the assisted wallet to users. By mid-2017, Novopay aims to increase the reach five-fold, to around 300,000 outlets across India.
“In a place like Ghatkopar (a Mumbai suburb), for instance, the opening of a new Novopay outlet sees hundreds of people coming forward to utilise its services to send money to their friends and family back home. The banks are also happy that walk-in customers are being handled conveniently by Novopay,” says Sridhar Rao, chief executive. “Our model is low-cost and, therefore ,easy to deploy in neighbourhood locations, giving both consumers and banks a huge relief.”
The low-cost model of using local shops is supplemented by the underlying technology architecture built by Nadhamuni, which he says is the world’s lightest Core Banking Solution (CBS) — with the platform allowing the company to scale the 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 the accounts of poor people, it doesn’t make sense,” says Nadhamuni. ” Even telecom companies didn’t build their own technology.”
Novopay has built a network operations centre which Nadhamuni call the company’s Googleplex. “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. “The marginal cost of creating a new account on our platform is nothing. We built it ground-up. So even if it’s a Rs 10 transaction, we are okay.”