Ladies and gentlemen, good day, and welcome to Infibeam Avenues Limited Q3 FY 2023 earnings conference call hosted by Go India Advisors. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rajat Gupta from Go India Advisors. Thank you, and over to you, sir.
Thank you, Lizanne. Good afternoon, everyone, welcome to Infibeam Avenues Limited earnings call to discuss the Q3 and nine months of FY 2023 results. We have on the call with us today Mr. Vishal Mehta, Managing Director, Mr. Vishwas Patel, Executive Director, Mr. Sunil Bhagat, Chief Financial Officer, and Mr. Purvesh Parekh, Head, Investor Relations. Also joining us on the call today is Mr. B. Ravi who's advising Infibeam Avenues Limited on corporate and financial strategy as an independent consultant. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risk that the company faces. I now request the MD, Mr. Vishal Mehta, to take us through the company's business outlook and financial highlights, subsequent to which we'll open the floor for Q&A. Thank you, over to you, sir.
Good evening and welcome, everyone. On behalf of the entire Infibeam family, I wish you all a very happy and prosperous 2023. To start with, I'm very confident that 2023 will be a great year for our country. And more importantly, this decade will see India reaching new heights, where the GDP is expected to cross $5 trillion, putting us number three spot globally. One of the studies that have been done across so many nations on use of electronic payments, what has been coming out of the study is that nearly $1 trillion have been added to GDP of various countries, and it has been able to raise consumption. Digital payments is expected to play a very important role in terms of, you know, our country achieving certain GDP expectations.
Digital payments in India grew more than 70% in FY 2022, and it is estimated to grow by 45%-50% in FY 2023 to approximately INR 54 trillion or $635 billion. Between 2021 and 2026, the industry is expected to grow in the range of 30%-40% annually. The government and the regulator are also very supportive, given the vision to make India digital and also turn India into a cashless economy. To capture the massive growth, we have charted very clear strategies, and we are working on certain initiatives like our omnichannel payment solution that will deploy across more than 1 million devices by end of FY 2024. The next is industry-specific vertical solutions for deep industry penetrations, like what we offer to the hospitality industry or the hotel industry through ResAvenue.
Bill payments for utility and recurring payments through Bharat BillPay. We have certifications for processing airline transactions covering more than 20-plus airlines. Solution for auto insurance, payment infrastructure, as well as B2B payments and payments for banks. We are constantly solving industry problems through payment solutions that really matter to the consumer and merchants. Now we have achieved another milestone of being the industry first to process Digital Rupee transaction for online retail payments. We are ready to go live with any bank that offers or that wants to offer Digital Rupee. We are in discussion with several banks, and we are also getting inbound requests from many banks to partner with us.
As government and RBI looks to curtail cash of INR 32 lakh crores, which is almost $400 billion, also the addressable market, we believe we are promoting the use of Digital Rupee to avoid certain cash costs like printing, avoiding, you know, currency manipulations, ability to track the currency, et cetera. RBI has requested banks to quickly lay the technology infrastructure and onboard new merchants to proliferate India's own digital currency across the country. We are currently among the only few to be able to onboard new merchants. This will enable us to build a very strong pipeline for future to upsell and cross-sell, while also giving us a lead position in processing Digital Rupee transactions.
We believe just like UPI created a revolution in digital payments, in the same way, eRupee will create the next revolution for India, as it is in true sense, a real-time money transfer with instant settlement to merchants. One of the reasons why we believe so is because it is exactly the same as cash, but in a digital format. Even UPI today is not instantly settled and follows the same process like any other payment options of T plus N number of days settlement. The use case for Digital Rupee can be many, many, and this will create new opportunities in the digital payment space. With that said, last quarter was very strong for us. We onboarded more than half a million merchants in Q3 alone.
In the payment gateway business alone, which is, you know, we have a history of more than 20+ years, we've overall added a record 1.1 million merchants in a single quarter across all our offerings, reaching 8.4 million merchants, an increase of 72% year-over-year. Our daily merchant addition averaged 11,700 for last quarter, which was hovering around 7,000-8,000 in the last few quarters. Number of merchants in the payment gateway business in Q3 grew by 385% year-over-year. As the digital payment industry looks right for growth in India, with strong entry barriers and strict compliances, we plan to take the most advantage of being able to onboard new merchants.
As mentioned in our call last quarter about international launches in the second half of FY 2023, payments in Saudi Arabia is now live. We are already one of the top two providers for payment gateway in UAE. In Saudi Arabia being live, we've onboarded several merchants. We'll subsequently provide updates for other geographies in coming quarters. If you look at, you know, going into FY 2024, we'll extend these geographies and talk about other launches as we build more ties and onboard more partners. GeM continues to remain strong. The GeM achieved a processing volume of INR 1 lakh crore of order value in November, in just eight months of FY 2023 versus achieving the same number in 12 months of FY 2022.
As per GeM announcements, GeM is expected and targeting to touch order values of INR 2 lakh crores by FY 2023, which is twice that of FY 2022. By end of January 2023, order volume and value on GeM has already crossed INR 1.5 lakh crores by doing INR 50,000 crores in just two months of December and January. Apart from GeM, we continue to explore more opportunities in our software platforms business to widen our offerings and expand partnerships. We will keep you updated on the developments. To sum up, I'm extremely confident and happy with the progress that we've made in the business, including improvements in the net take rates in our payments business, which we intend to take to double digits by FY 2025. We see very strong tailwinds for digital payments industry and believe that the game is still not over.
There is so much innovations and opportunities that constantly arise. We feel that with prudent policies, compliances, safeguarding the consumers and merchants, and all these profitable business models will be able to pay off in the long term. I will now hand over the call to Vishwas, who will give you an update for our payments business. Vishwas, over to you.
Thank you, Vishal. Good afternoon, everyone. Q3 is a strong quarter for NPB revenues for payments business. Being a festive and travel-related quarter, we experienced a strong merchant pipeline during the quarter. In Q3, we focused on quality rather than quantity to build a long-term sustainable business, whereby we were able to increase our take rates and hence profitability in the business. Change in payment mix towards non-credit payment options led to a lower gross take rate and hence moderate in gross revenue. The net take rates increased as non-credit payment options, net banking, debit card contribution increased, which are more profitable for the company, leading to better profitability. Merchants seems to have chosen more debit options in this quarter to save on their MDR costs.
This resulted in higher earning for us, as we provide 60-plus net banking options to direct integration with the bank's core banking solutions, highest globally, and over 100-plus debit card options. Contribution from zero MDR payment options in the quarter have gone up from nearly 6%-7% to roughly 10%. The subsidy incentive incentives that are announced by the government on zero MDR or non-chargeable payment options like UPI and RuPay debit card in the current fiscal, government has increased it by two times, for INR 2,137 crores from the previous INR 1,400 odd crores in the previous. We hope to receive our share in Q4 or Q1 of next year, of next financial year. The industry demand, however, remains at INR 8,000 crores from the government.
To date, FinTechs and PGs have not received anything from the government, what the government has shared with the banks, inclusive of previous years. Let me give you a quick update on our investments in GoPayments, that is Instant Global Paytech. Infibeam Avenues has invested INR 16 crores in GoPayments, increasing its stakes to 54.80% from the current 52.38%. GoPayments has an offline business model targeting the unbanked and the underbanked. The business has significantly impacted during the two years of COVID in its four years of operational history. The company has managed to quickly turn around and scale the business last calendar year and turned EBITDA positive in December 2022.
We are extremely proud of the management who have turned into profitability in such a short span during the challenging environment, both in terms of the pandemic and the competition, by focusing on our core philosophy to generate profitable revenue and offer quality services. Our investment in Go will help Go to scale further and achieve profitability while scaling the business. This will help NPB achieve higher return on investment and benefit all the shareholders of Infibeam Avenues . As far as the international operations are concerned, UAE is still going very strong. We have commercially started operations in Saudi Arabia, we will scale this from next financial year. We're also in the process of rolling out our CCAvenue all-in-one app, that's TapPay, in GCC soon, as it is a ready market for tap-based payments.
According to Visa study, contactless payments are among the highest in the GCC region. Out of total digital payments, 94% are contactless in Saudi Arabia and 92% in UAE. Finally, a comprehensive set of payments and software payment solutions, platform solutions supports all the digital payments acceptance requirements of the merchant, be it in-store, online or omnichannel payments, along with the tools for the merchants to enable e-commerce. With this, I now hand over the call to Sunil Bhagat, our Group Chief Financial Officer. Over to you, Sunil bhai.
Thank you, Vishal bhai. Good evening, everyone. We are extremely pleased with our performance in Q3 as we worked towards improving the quality of our earnings. We were severely impacted during COVID from lower business volumes, low margin businesses like utility, education, insurance, etc., and severe pricing competition. Infibeam focused on profitable revenue growth by ensuring quality customer onboarding, strengthening ties with ecosystem partners, expanding high margin bill payment businesses, growing the infrastructure services, strengthening international markets, etc. If you look at our standalone performance for five years, from FY 2018- FY 2023, comprising Infibeam's India payments and software payment businesses, including the GeM portal, the growth in profit after tax is approximately 10x.
The company will continue to focus on its core business philosophy of profitable revenue growth and strive to bring the same in the next 10X in this decade from various strategic initiatives, we are, and we will undertake that. Q3 is a reasonably strong quarter for Infibeam. The payments business net take rate grew by 63% year-over-year to 8.9 bps. The company is taking steps towards growing its net take rate across payments vertical and reach double-digit take rates in FY 2025. Improvement in net take rate led to higher net revenue, generating better operating and profitability margins during the quarter. On a like-to-like basis, consolidated PAT for the quarter was INR 27 crore, up 11% year-over-year and highest among the three quarters reported PAT.
Like-to-like standalone PAT for Q3 was INR 24 crore, up 28% year-over-year. Overall, we are on track to process transactions worth INR 7.5 lakh crore for FY 2025. With this, I now hand over the call to the operator for starting Q&A. Thank you.
Thank you. Ladies and gentlemen, we will now begin with the question and answer session. Anyone wishing to ask a question may please press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Rahul Bhangadia from Lucky Investment Managers. Please go ahead.
Thank you for taking my question, sir. Congratulations on a very good set of numbers. Sir, you have mentioned on the previous call also, and just a while back you mentioned that you intend to take your net take rate to double digits by FY 2025. Now, given that, you know, GeM will be a big driver of your TPV, and that is unlikely to be anywhere close to double digits. How do you kind of?
Sorry to interrupt, Rahul. Sir, your audio is sounding very muffled. Can you come a little more closer to the mic?
Hello?
Yes.
Am I audible now?
Much better, sir. Thank you.
Okay. Sir, given that, you know, GeM will be one of the bigger driving factors in the TPV growth of the company and there the take rates are of the order of, let's say, 7 basis. How does the math work out or where will that double-digit kind of number come from?
Sure, Rahul. There are three things that we are focused on. Internationally, our take rates are 15 basis points compared to India. If you look at, you know, our projections for the next up to 2025, we expect that today a single-digit % of our revenues come from international. We expect that to go into double digits. Based on what we believe, we should get to 20%-30% of our revenues in the next two years to come from international growth as well. International take rates are far better today compared to our take rates in India. That's one part. The second thing is that we expect to actually introduce offline payments, that is TapPay. We want to add...
We believe that if we are at 8.1 merchants, we should get to 10 million merchants. Over there, since the card is present, we expect that the take rate should be better in the offline setup compared to the online setup where the card is not present. We have also filed certain patents around those areas, we expect that, you know, with certain kinds of SDKs that we open up, where you literally don't have to do anything, you just plug in the SDK into the existing payment setup of yours and it starts processing payments. Our expectation is that going to 1 million, that is a more than 10% of a merchant base, you will see perhaps some improvements in that area as well.
The third thing that, you know, Sunil's just highlighted, which is we are focused on profitable sectors. We have taken up sectors where we believe the value, is pretty strong. Today, the overall, growth in payments is expected to increase significantly.
A combination of those factors, we believe that we will be able to get to a better take rate. Today we are at 8.9%. We are not calling out, you know, saying that we can do it next quarter. What we believe is that let's make sure that we have built out a strong thesis around how we can get to double digits, which is what we are focused on today.
Okay. Okay.
Yeah.
Thank you for that clarification.
Rahul, just to add, the double digits that we are talking about is for the payments business. GeM is a single customer where the take rates are already contracted. We are not including GeM as part of double digits. It's only the payments business where we are talking about double digits.
Okay. Then on a, let's say on a weighted average basis, we might still be around the eight or nine bit number only, right?
Perhaps. That will depend upon what is the weightage of TPV coming from payments.
Okay.
coming from the GeM business.
Okay. Okay. Thanks, thanks for that clarification. That was important. Just a question on the GeM portal renewal thing. When does the process start, and by when will we know the end result?
Basically, the RFP has been out. You know, current positioning is that by end of this month that they will be taking the bids. Very likely in the next few weeks we will know.
Mm-hmm.
just so that you know, it is 18 months until you actually build out the new framework, so this contract will continue until 2024.
Sorry, I didn't get the last part. Sorry. 18 months is, bid, I didn't get that.
The new RFP states that you need to build out the framework in the next 18 months before existing, you know, opportunities will move on to the new framework. The existing contract which we have will go on until 2024.
Does that mean that when you shift to a new framework, whatever work you have done in the last five years, it's a build up on that or it's a separate thing altogether? How does that work?
Yes, it is a separate thing. In other words, there may be some base that can potentially be common. I think a lot of systems, processes, integration, so on and so forth are in place. But there are certain requirements that government has which is additional functionality on top of whatever we have provided so far. If you go through the RFP, you will see that there is a payment of INR 135 crore towards build-up of the new framework.
Okay.
There is a fixed and a variable that goes on every quarter.
Okay. Should we expect your consortium to bid as it was in the previous tenure?
We still have three weeks left, so there may be a few changes. Yeah, we expect that definitely we are bidding.
Right. Sir, just one final question before I next season. You don't have a non-transaction revenue recorded in this quarter. Has that been clubbed with the transaction-based revenue or, you know, just trying to get an understanding there?
Uh, non-transaction-
There is. The platforms revenue include GeM revenue and the non-transaction revenue. The entire platforms revenue has two parts. One part coming from GeM, which is the transaction revenue. The other part is non-transaction.
See, you have a net take rate of INR 85 crores, which this quarter that you have declared. A part of that will also be in non-transaction revenue then? That's how it is.
Sorry, INR 85 crore? I didn't get that.
INR 85 crores is the transaction-based revenue, right? The net take rate.
INR 85 crore. Sorry, can I take this offline with you because I think you are mixing up something.
Take it offline. I'll take this offline. Done. Thank you. Thank you so much for answering these questions. Thank you very much.
Yeah.
Thank you. The next question is from the line of Akshay Doshi from InCred Capital. Please go ahead.
Hi sir. Thanks for the opportunity, congratulations on the good set of numbers. Sir, I had around three questions. The first question is that, you had guided for a TPV of INR 4 lakh crore for this year-end FY23. In nine months, we were able to achieve around INR 2.75 lakh crore. Sir, going ahead, how confident we are to achieve the balance INR 1.25 lakh crore. Also, if possible, you can share the January numbers of TPV.
Sure. If you look at our numbers for the last quarter on a consolidated basis, you know, we do about INR 95,000 crore in transaction processing volume. The question is that, you know, are we able to gap, you know, the INR 1 lakh crore, INR 95,000 crore, INR 1 lakh crore to INR 1.25 lakh crore. Generally we see Q4 being very strong in certain verticals and GeM being one of them because a lot of buying, government buying happens in the last quarter. We are tracking it up. You know, if you look at, you know, just the normal transactions of applying Q3 to a Q4, we expect that, you know, even Q4 so far has been very strong for us.
While we don't talk specifically about months, you know, what we know is that, you know, today we are tracking to the number closer to 4 lakh crores. As and when, of course, you know, like I said, the last three months for GeM typically are very strong months. What you will see is that government spends significant amount of, you know, capital towards in the last three months of the year. We expect that, yes, you will see numbers which are closer to 4 lakh crores. Today, we believe that we are tracking to that number.
Oh, okay. Okay, sir. There, understood. Sir, my second question was, like, what is the update on CCAvenue TapPay? How many merchants have we onboarded? How is the progress going on there? What is your target for the next financial year?
Yeah. I'll start, and Vishwas can add in. What we had communicated last time was that we would like to reach 100,000 odd merchants by year-end, this year-end, which is March 2023. Next year we'd like to get to 1 million merchants, which is, you know, 10 lakh merchants by end of 2024. We've laid out our strategy in terms of how to achieve it. You know, we have, we believe that 100,000 we will be on track to achieve by end of this year, which is FY 2023. You will start seeing hopefully next year, you know, offline QR codes and many others, which is CCAvenue QR codes in offline payments.
Because once we reach a critical mass of 1 million merchants, then that is where wherever you see certain QR codes which are more UPI related, you will start seeing CCAvenue TapPay QR codes as well for merchants. I believe that, you know, this year we'll definitely reach 100,000 merchants and, you know, next year we should be tracking to 1 million merchants.
Okay.
I think it's a combination of both, CCAvenue TapPay as well as allowing our SDK. I don't know whether you're aware, but even if we give out our SDK, which is the software development kit, for someone to integrate into their existing payments, it requires a set of approvals from card networks. You know, one needs to actually ensure that security has been taken care of, which is the utmost importance. You know, anyone and everyone who actually uses, you know, an existing payment provider can actually allow people and consumers to tap and pay. We are happy to announce that we have been approved by card networks for our SDK to be integrated into existing payments network. You know, which means that, you know, the million looks very doable for us for next year.
Okay. Great, sir. Understood. Sir, my last question was on your gross revenue. If I look at the quarterly numbers from Q2 to Q3, it has been reduced from INR 477 crore to INR 415 crore. Any reasons around that?
Sir, we've mentioned it. Yeah, Vishwas, go ahead.
Okay. Essentially, the, we have like 100+ payment options, right? There is credit card, debit card, net banking and others. Credit card, typically, the usage, the MDR is high. That's why merchants are more and more pushing towards net banking and mass things like debit cards and other options, right? Our earnings on credit card is less than what we earn on net banking and other options. Merchants have started pushing... Even if you see on many checkout pages or websites, they are pushing up the debit options more so that, you know, their cost goes down, MDR cost goes down, right? For us, it's better if it moves towards net banking and debit cards and other things.
Hence you will see that though the gross revenue has come down marginally to INR 415 crore, but our take rate and profitability has increased considerably this quarter. Even our take rate now has gone from 7.2 to 8.9, right, Purvesh? Just correct me.
From 7.5 to 8.9.
Yeah. From 7.5 bps to 8.9 bps. Our net take rate and profitability has improved.
Okay. Okay. Thank you, sir. That was very helpful. All the best.
Thank you.
Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is on the line of Mitraj from Anupati Advisors. Please go ahead.
Hi. Thanks for the opportunity. First question is in terms of the TPV guidance. Sir, what percentage of TPV do you expect coming from GeM portal in the guidance of INR 7 lakh crore-INR 7.5 lakh crore for FY 2025? We believe that, you know, today if you look into it, approximately close to INR 1.6 lakh-INR 1.7 lakh crores comes from payments. And that is expected to continuously increase. In fact, we expect that payments will significantly be larger in the coming few quarters.
If you look at the perspective or forecast that we have developed, we think if it is INR 2 lakh crores for this year, we'll be conservative for the next two years, and we expect that maybe that two will be INR 3 and a half. payments will get to about INR 4 lakh crores.
Okay, okay. At the time of renewal of this contract, are we expecting any reduction in the take rate from seven bps to, let's say five or six bps, considering the strong increase in volume of GeM?
Absolutely. If you look at how the contract is structured, there is fixed and variable this time around. If you remember last time when we bid for the contract, it was all variable. In other words, there is a fixed component that comes every quarter post-deployment. There's an amount that comes pre-deployment, which is the one-time amount, which is about close to INR 135 odd crores. Then there is post-deployment amount that comes every quarter. Then there is a variable component on top of it. If you look at the blending of that, depending upon the number of transactions, the kind of transactions, one can make assumptions and come up with certain take rates.
Yeah, we would expect that, you know, based on the volumes, as the volumes increase, and we have taken a very conservative approach. I'm sure that there could be aggressive approaches as well. We have planned for a conservative setup, and we think that, you know, there may be marginal impact to, you know, the take rates that we get from GeM today versus what we'll achieve given that, you know, the volumes will be higher. It's a slightly calculus formula because it is based on number of transactions, the value of transactions and a few other parameters.
Okay. Okay. Okay. Third question, sir, can you please explain our revenue model in processing the Digital Rupee transaction?
Vishwas here. As of now, there is no revenue model in the Digital Rupee. It's just coming out. Just like now only the test pilot phase is going on, and will typically be when the option is enabled across merchant and the volume comes in. That kind of a regimen, it's up to the Reserve Bank of India to put in a mechanism where there is some money to be made by the service providers who are gonna activate this across the country. Right now it's just a test pilot, so it's like it's INR 32 lakh crores of cash in the market. This is the UPI moment to disrupt cash, right?
Okay.
It's in a digital format. It comes like in a notes currency and it transfers, and transfers. In real time, in checkout mechanism, in online where we have enabled, how does one, say, pay cash, through the Digital Rupee. All those mechanism, it's all quite innovative and let me tell you, it's a first in the world right now. Going on to the MDR and this mechanism on revenue, it's too a little early. Maybe in the next one or two quarters, there will be more clarity on all the pricing and mechanism and even in fact processes of chargeback and other things also will come in place.
Okay. Okay. Thanks for answering questions. All the best.
Thank you.
Thank you. Reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is from the line of Prakshal Jain from Lucky Investment Managers. Please go ahead.
Hello, sir. Thank you for the opportunity. I wanted to ask that this change in transaction mix from credit-based payment options to non-credit based payment options, which has led to lower gross revenues for us this quarter. Was there some special trigger this quarter? Because we are seeing, I mean, we have recorded lower gross revenues Q on Q for the first time this quarter. Was there some special trigger this quarter?
Thanks. Yeah, there was one trigger, which is a lot of competitors, they started giving portfolio rates to clients. portfolio rates meaning a single rate across different payment options. Whether your mix is X or Y, that you get a single rate. There are several clients where, you know, Vishwas can add to it more, the point was that, you know, you know that the certain take rates for credit is different than debit and other payment options.
Right.
What is ended up happening is that wherever the payment options of credit were lower for a merchant, It made sense for them to start sending transactions there. Whereas, and we were perfectly fine with that approach because obviously the rest of the volume came to us because we were better than those. I think, you know, there's a slight impact there. Second, what Vishwas said was that merchants started pushing non-credit options because in credit they will lose a lot more compared to other payment options, other non-credit payment options. For the merchant also, it made sense to start pushing the non-credit options because it's more lucrative for them compared to credit. Combination of those two triggered the gross revenue bit.
Okay. Just for the clarification, sir, on the first factor that you mentioned, you said that the volume came to us because we offered the better rates to the clients as compared to our competitors. Is that right?
No. When you offer a single, you know, window across payment options, for the sake of argument, you know, based on the mix, you would want to, if somebody approaches and says that, you know, "Here's the single take rate," merchants are smart enough, they will start sending the options where they are getting benefits. Of course, for non-credit based options, even if we keep and maintain our same rates, obviously they'll prefer us.
Okay.
I think it was not about getting better rates, it was just a better option for the merchants to send volumes to us. That is one. The second is that merchants also have started, you know, pushing a lot of non-credit options to us, given that it is more lucrative for them to process those for customers compared to credit-based options.
Just to simplify it.
Which was add-
Yeah. Just to simplify it. Typically some of the competitors are offering a merchant a rate of, say, 1.85% across all options. Say credit card, debit card, net banking and all those things, right? 1.85% flat across all merchants.
Okay.
Now, we typically used to give credit card at 1.92% and net banking at 1.25% and other rates that we have, right? Our earnings on net banking were anyway higher than what we used to earn on credit card. What merchants started to do, some of the bigger ones that we had, gave credit card to at 1.85% to them. All the net banking which used to go earlier with different, since we are at 1.25% and the other take rate there is at 1.8% for them, they started pushing all other debit options of net banking and others onto us. Hence you see a spike in the volumes, you see a spike in the take rate and this thing.
Yes, gross revenue will come down a little bit because of the payment mix change. Okay, sir. Okay. All right. Thank you for the elaborate clarification. Thank you.
Thank you. The next question is from the line of Dipesh Sancheti from Manya Finance. Please go ahead.
Hello, sir. Am I audible?
Yes.
Yeah. Yes.
How much percentage credit and non-credit volumes coming? Credit is about one-third, and about 33%-35% and non-credit will be the rest, which includes CI, debit card, net banking, etc.
going forward, do we see these volumes of non-credit going, I mean, increasing?
Primarily if you look, India is a debit society. Like, unlike the people in the West who live off on credit, right? India, China and others in the ASEAN region are more debit societies, where, you know, if you have money only then you spend, you'll not go overboard on credit and other things, right? That's why the credit card uptake has been stagnant. If you see the overall credit card numbers also for the last every month, it's always stagnant between INR 90,000 crores a month to INR 1 lakh crores a month. Last three, four months it's been stagnant there, right? The other side, the debit and others is growing massively. Net banking, the debit cards and other usage is growing massively. That's a trend that you can look overall from even from RBI figures also, right?
That's where it is there. For us, it depends. If tomorrow credit comes or makes a comeback and as youngsters and others go more in for credit, maybe the credit transactions will also do. From our perspective, we are offering all 200+ options, credit, debit, net banking, wallets, SIs, EMIs, everything. It depends on the customer and merchants. We'll track overall from a macro perspective how the payment option changes. Yes, let's see. It's something which is on a macroeconomic front on how the payment options the consumers are choosing, rather than onto us as a payment processors, where we are just enablers of these transactions.
Right now, what is our market share?
In what?
In this payment processing.
There are various ways to look at it. Credit cards, for example, I already told you what is the kind of processing we are doing. You can just compare that with the volumes that RBI gives out. You'll get a rough idea. We don't give out the entire mix, like how much is debit card, how much credit card, how much net banking. Our credit like I said, is about 33%-35% for the last quarter. The rest is debit. You can just take a look.
Okay.
There are some numbers out there too, I too got to restate. We think that we are in, I mean, depending upon how you look at it, we only record what is processed, successfully processed transactions, and not necessarily, you know, transactions which have been attempted. In that, we believe that, you know, we'll definitely be in the 15, 10%-15% of the merchant to consumer, merchant to consumer to merchant side. We should be at least higher or almost there.
Yeah. We only count the e-commerce volumes. We don't count the payouts. I think some of the companies also count the payouts as their processing volumes. That makes it a bit difficult to compare, you know, between the companies.
Okay.
Yeah.
Are we also planning to build platforms like, just like we did for JioMart? Are we planning for PVR or Jio, which is part of JioMart only, and Tata Neu or MakeMyTrip, where these kind of places have there is maximum credit card transactions, especially in travel business?
Yes, we are. Like, if you've seen our ResAvenue system for hospitality, more than I think 3,500 hotels are already using that platform. With the new challenges of tokenization of cards, non-storage of credit cards in their property management systems and other. A lot of innovation and new technology is being built in partnership with some of the biggest chains, hotel chains in the country. That's with the hospitality platform. We're also building platforms on the B2B space perspectives. Today, Hindustan Unilever, Bisleri, a lot of guys are using this entire vendor management along with their credit payments and other things, where there is card issuance as well as acceptance. Card issuance platform is something through our subsidiary, GoPayments, we are building. A lot of CUG debits, credits have gone out through that systems.
A lot of. As you said, if you see the whole overall our company, this thing, solutions, it's with payments and platforms. It's like a horse and a cart, both go together. Pull its data, it gives us enhanced margins, it gives us stickiness with the merchant, where new competitor cannot just give one part of the solution and try to take because it is tightly integrated, built together between our platforms and payments.
Okay. Thank you. Thank you so much.
For the record, we in the hospitality solution did more than 1 million room nights in a year, booking for our hospitality partners.
INR 1.4 this quarter.
Yeah.
Oh, wow.
1.4 million room nights. 14 lakh room nights is what we have booked through our systems for our hospitality partners, including some of the biggest names. Yeah.
That is in this quarter?
No, for the full year.
Full year. Okay. Yeah. Thank you, sir. All the very best. Yeah.
Thank you.
Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star one. The next question is on the line of Ayushi, an individual analyst. Please go ahead.
Hi, sir. Congratulations on this great set of numbers. Sir, basically I wanted to understand the breakup of other income and, like, because we can see that on a consolidated basis, the, like, other income has reduced from INR 32.76 crores- INR 13.3 crores. Sir, what is the reason behind this decrease, and what are our sources of other income?
Sure. Basically last quarter we had talked about this. It was a one-time income last quarter, that was recorded because of the Mark-to-Market on certain investments that the company had made. Because that was primarily the reason why you saw other income grow last quarter. You know, this quarter it is interest income that we accrue, as well as the slight Mark-to-Market gain that we have recorded this quarter as well on our investment.
Okay. Okay, sir. Does this PAT guidance of 110-125 crores for FY 2023 include, let's consider other income or is it excluding the effects of other income?
You know, we had given the guidance with the objective that we will attempt to actually achieve the targets without the other income. We think that, you know, we see visibility on, you know, numbers within the 10% range. Like I said, Q4 is typically a very strong quarter for us. We are cracking it and we think all across the board, the guidance that we have given for revenues are definitely on the higher end. For EBITDA, we'll be in the higher end of the range. For PAT, we will see how the performance is in Q4 and come back to you on this.
All right. Just, sort of final question, sir. How many PoS, like the TapPay have we installed so far? Sir, in the management commentary in the beginning you said that we are among the only few to process CVV-free transactions. Who else are in the market and what kind of competition are we seeing here?
I didn't get the first question. Can you repeat the first question for the simplicity?
How many PoS or like TapPay terminals or the SDKs have you distributed? Like, have you like, you know, tied up with any major merchants or what is like an update over there?
Right now, TapPay is mostly focused on the smaller merchants. We have in this quarter, we already announced around 50,000 to 1 lakh installations of TapPay done across the market. It's growing fast. As I said, it's revolutionary because it takes away that clunky point-of-sale terminal which costs around INR 10,000-INR 12,000. Here any kirana shop in a even a deepest village in Manipur or Assam or Odisha can just go to the Play Store and download the app and start accepting payments on his own phone, right? A credit card, debit card payments on a customer present scenario. All those things perspective, it's growing very fast and it just needs a little bit more push and training and other things that we are focusing on.
As we mentioned earlier, we aim to take it up to 1 million offline merchants shortly. For even the bigger merchants, a lot of things where, you know, we are working with hospitality, little forward-looking can't say, but a lot of high-end, good technology is being coded to make the use cases within the hospitality where they can give in-room check-in, check-out instead of going to the counter and checking out to a lot of delivery boys can have their individual
This CCAvenue TapPay, this thing where they can collect payments when they deliver the goods instantly to credit, debit and other things. A lot of other things has been coded and being built. It's evolving technology. As far as CBDC is concerned, we've built a lot of high-end technology to enable RBI's mission to make this CBDC, the Central Bank Digital Currency, the eRupee, available right now. We've done a proof of concept with five or eight merchants, where we did the first online CBDC transaction for retail payments in the country. We are the first to do it. A lot of coding effort. Since it is totally new in the sense that many aspects of this kind of a currency option has not been thought even by the Central Bank.
It's a continuously evolution process. I think once, all those processes and everything, other things comes in place, it will really take off. Right now it is just in a pilot phase and, we are still working out on lot of modalities and lot of use cases and lot of enablement to make it, you know, as strong and as innovative as UPI was for bank debits, this kind of system that can disrupt cash. It will take some time and effort, but, we have been the first and we are still working and building a lot of new technology and use cases for this also. It will evolve in the coming quarters and you will see the growth, we will report it.
As well as also the press is also very keenly following it.
Okay. Okay, sir. Just to confirm, sir, if we look at like the CCAvenue, this, the app downloads right now, there are like a 1 lakh downloads plus. All those downloads are by small merchants only, right? There are not any big merchants over there?
There is a mix of both. Mostly we are focusing on the small merchant where there is an immediate need and this. Definitely there are some middle merchants also. As you as this thing will give out the client names in the coming quarters when we make bigger use cases and this thing for CCAvenue TapPay and get deeper integration to the bigger names in the market.
Okay, sir. Thank you so much for that comprehensive answer.
Thank you.
Thank you. The next question is from the line of Rahul Jain from Dolat Capital. Please go ahead.
Yeah.
Please interrupt, Mr. Jain. There's a lot of disturbance from your line.
Is this any better?
This is slightly better. Please proceed.
Yeah, sorry for that. just wanted to understand the perspective regarding this payment aggregator issue where we are seeing that the competition is not getting the approval, but we have got the license. Any shift in the market share is something that if we might have observed and how you see the competitive landscape shaping up out here?
Krishna here. Look, we've been a long-term player over two decades growing this entire digital payments systems, right? We have done it step-by-step, block-by-block, building compliances, building the next level of security. Even, you know, more importantly, not being greedy in giving access to the Indian payment systems to unscrupulous merchants, right? Many we have seen, many we have seen now, where because of the laxity of this compliance issues or giving access to merchants to Indian payment systems, where today now RBI has told them to clean up their act, right? Today, yes, four of our biggest competitors cannot onboard any new merchant as of now, as of today.
Yes, it has impacted them, but it also shows to our shareholders that the value that we delivered on building the next level of security and the compliance that we follow are top-notch. That's why we are active and we see a lot of... We did display that the record number of new merchant that we onboarded in this quarter. Many of these comes because of the reputation and the goodwill and the strong compliances that we have demonstrated to our, the Central Bank, RBI, as well as all our banking partners and to our merchants that is now paying off. Yes, it does affect the market. It does affect many other players where they cannot onboard new merchants. This, our long-term strategy of playing a real long-term value-driven game is paying off now.
Yeah. Of course, I understand the long-term aspect of it, which is very, very relevant. What I was also trying to understand is any anything, you know, it's likely from a near-term advantage perspective also if we are able to onboard some relevant scalable merchant in the interim, which could give us that advantage of, you know, taking away market share near term.
If you have seen, we have been constantly doubling our TPV over the years. We are not dependent on this opportunity, but on a long-term goodwill and other things that is there, right? Merchants do trust us, and a lot of, definitely the current non-boarding of any new merchants by the four top other PGs is definitely helping the case. We don't look at it that way as an opportunity in someone's distress. We stand by our feet, and I think 22 years is good enough time to develop our reputation and this thing where people and merchants do trust us because this is ultimately money and finance that we are handling. It's a record of 22 years, whether it is, you know, every day, single day, thousands of crores are paid out by us. We...
Not a single penalty by any card company or RBI on anything. That value system, somewhere, there is a premium and there is a credit given by many of those things. That's paying off, and we'll continue to grow that reputation and quality and technology and compliances that we always have been known for. Right.
In the short term, you may see. This is Vishal. You'll see, if you look at the daily merchant addition averages, we used to. In Q2, we were averaging about 7,000-8,000 merchants. We have gone to 11,700 from there on a daily average basis. The number of merchants who are signing up with us has significantly increased. That is a small short-term blip that you will see because of this, these certain events and perspectives.
Right. Right. Fair enough. Just last one clarification, sorry if this has been a repeat question. Regarding the GeM, what we saw is one of your consortium partner has seen a revenue impact because of the repricing on the volume-led basis. Is that already factored in our revenues also or it's yet to happen?
No, it's factored in. Absolutely.
Sure. Thank you so much. That's it from us.
Thank you. The next question is from the line of Anil Nahata, an individual investor. Please go ahead.
Yeah. Thank you for the opportunity. The first question I have is that, Vishal, if you can give an update on the TrustAvenue initiative that we had launched some two or three quarters back.
Sure. The platform was launched for, you know, merchants to avail loans from banks and NBFCs. We had two different ideas of actually growing that framework up. Now basically, the whole idea was a tech platform where we own as a tech platform and there's a spread between give and take. It's similar to what a DSA or a super aggregator DSA looks like from a revenue model perspective for us. The two opportunities that we were wanting to build upon is our own merchant base and then working with a very large marketplace, significantly large marketplace.
Finally, the marketplace has a lot more data and information about how to utilize the framework so that, you know, when products and services are being offered, that there could be factoring, there could be certain kinds of loans that can be provided to merchants. We are actively working on, you know, building up the pilot for, you know, very large merchant to be able to utilize TrustAvenue. While we have launched it, I think, you know, the larger needle mover for us would be to be able to give out because this is a technology framework. When you provide a tech framework to, you know, maybe one of the top five marketplaces in the country, that potentially will become a very interesting opportunity for us because automatically it gets to scale.
That is the one that we'll be working on, and we'll be talking about that maybe in coming quarters.
Can you give some sort of a timeframe that you are looking towards the integration and sometimes when we can?
It will be in the first quarter to second quarter of next year. That is the timeframe when you can expect to hear from us about TrustAvenue more.
Okay. Secondly, about the tie-up with the bank side, the loan dispersal side.
Yeah. There is direct tie-ups and there are many aggregations as well, and there's a lot of value chain that is associated with that. Generally speaking, when the volume is significantly larger, then the economics of that change significantly as well. I think, you know, it's a combination thereof. You know, you must have seen some of the loan disbursements of other fintech companies and how they've worked out. We have taken appropriately conservative view in terms of how to, you know, enable such activities. If you look at factoring, of course, the spread is not as large as, you know, unsecured loans.
I think, you know, fintechs and banks, and financial institutions, they are somewhat getting, acclimatized as well as, not being shy about giving such, loans based on data. Success rates across the board will improve. I think given that, a large marketplace can utilize it becomes a very interesting opportunity for us to be able to act as a technology partner in this. We've made it very clear we are not putting up a balance sheet on this. And we will continue working like a DSP, which is a technology solution provider.
Yeah. Just it's basically a platform. The second question is to Vishwas. I mean, in terms of CCAvenue TapPay, while I heard that you are having some
Sir, there's a lot of disturbance from your line.
I'm sorry about that. The question to Vishwas is that while CCAvenue TapPay, from the last quarter, I had a question as well. The key question that comes to my mind is what is the factor inhibiting the rapid scale-up of this? I mean, is it something that is a technological limitation or is a market learning issue or what? I mean, suppose if I want to take CCAvenue TapPay tomorrow, can I go and take it for my business?
Yes, of course you can. We are live in that respect. You can download the app and start, even do online registration and start accepting payments. That is live and I think we have almost reaching 100,000 merchants now, who's doing that. The thing is any introduction of any new kind of acceptance mechanism, right? For that, it takes a little time to push off. The word of mouth has still not started, right? The moment it takes up and moment when they see the convenience that the use cases and other things, then it will take off like anything. Right now we are just working on lot of different use cases.
like I've given an example, like say if it is a restaurant and they have 12 delivery boys, they can't have 12 point of sale terminals in their hands, right? Within one merchant account of the restaurant can we have 12 user managements, right? Which each delivery boy's mobile number maps. Whenever they collect the payment, the main account gets a notification that this payment has been collected and all that stuff. Building for that still it's a continuous development and lot of other things that is there. Rest assured you all can see the benefits, an INR 12,000 clunky point of sale terminal with battery issues and supplying printer rolls to say a tier four city or town deep.
Or a village deep inside a state like Manipur or Odisha is much easier to just download the app and do everything on the phone of your existing phone, right? Those all things are there, many use cases is there. You'll see the proliferation. It's just a matter of time. World has already recognized that contactless payments, the CCAvenue TapPay, is the future where all these existing terminals will be eliminated in the next two or three years. We are the right frame. We are the only ones which are certified with PIN on Glass, where, you know, our transactions, any transactions, any transaction above INR 5,000, you can enter your PIN on the phone of the merchant.
That certification is exclusively with us for in Asia actually and PIN on Glass for higher or bigger amounts of more than 5,000 is only with us right now. All those things are there. It's a matter of time till it fully goes out. You will see a lot of deployments where we are having an integrated solution where we put not only the CCAvenue TapPay but also our QR code along with our marketing efforts now. In the coming few quarters you will see a lot of traction and changes coming there. As usual, we'll be leading the whole effort of this contactless payment in the market.
Okay. Basically, we can think about seeing some meaningful revenues coming onto this from Q2 onwards, FY 2024?
I think some of the revenues have already started. It's a merged thing because ultimately at the back end is still the CCAvenue payment gateway. That's just a form factor. The TapPay is just a form factor. So you use the CCAvenue payment gateway. It's an omnichannel payment gateway. That means that you can use TapPay for your offline in the store customer presence scenario. You can use it for your own company app if you have to collect payments in that. You can send out WhatsApp payments link, other things that is there. You can use it on your website along with your existing shopping cart. All those transactions are all reflected into one CCAvenue payment gateway.
This is just another form factor that we have added to specifically cater to this offline and other merchants whom we were not catering all these years. We never believed in the point of sale terminal business because that's a very expensive, difficult and not revolutionary. This is something which is different and can disrupt the whole thing.
Absolutely. I mean that's why I think lot of participants have the question on CCAvenue TapPay because this is really a disruptive thing. If I can just ask you a question that, while I know it is all ultimately aggregating into the payment gateway business, what kind of transactions you are seeing on this? I mean, have you crossed 1 lakh transactions per day? Some sort of order of magnitude, I mean, that will give us an idea of-
As I said, this is a merged transaction. I cannot give a diverse right now. Overall on the transaction volume, all these transactions are also reported. We are not segregating because as we said, through the phone app, the CCAvenue app, which has TapPay, you can send a payment link also and the transaction will come in. In that app all your web and others are also there. That intricate level of detail reporting that these transactions for a particular merchant came via a tap on phone or on their website or in their app or through a payment link or through QR, those details I think it's too the same, detailing to disclose. On the overall volumes it is reflected. Is all I can say.
Okay, thank you for that. The final question on GeM, if I heard a previous participant asking a question that there has been some repricing on volume basis. Can we get a sort of idea what kind of repricing has happened and since when this has been applicable?
If you're referring to GeM repricing, is that the question?
Yes. Correct, sir.
Yeah. Fundamentally, what it means is that beyond a certain threshold or volume on a particular order, that there is a capping. In other words, certain kind of at a certain threshold of a value, that because if you remember and recollect, we had a variable fee. In other words, if there are multiple orders for a single setup that you have done, then it continues exactly the same way. For a very large order, there's a capping that government has introduced, and that is the repricing that we talk about. Second is the G2G order, government-to-government order. If there's any government-to-government order, then there is repricing on that.
Those are primarily, I think, you know, if I had to summarize the two impacts that you would see. There is also a slight change in terms of the, if you recollect that, you know, beyond a certain volume, that the bids for the consortium goes down. There's been a marginal change in that. The two major changes are these two, and that has been factored in in all of our revenues.
This has been applicable since, like, which quarter?
This has been applicable since last two quarters.
Thank you very much. That answers my question. All the best.
Yeah. Thank you.
Thank you. Ladies and gentlemen, due to time constraint, that was our last question. I now hand the conference over to the management for their closing comments.
Thank you all for joining our Q3, investor call, and we look forward to keeping in touch with you. Thanks again.
Thank you. Ladies and gentlemen, on behalf of Go India Advisors, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.