Ladies and gentlemen, good day and welcome to the Infibeam Avenues Limited Q1 FY 2022 earnings call hosted by InCred Research. 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 zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sreesankar from InCred Research. Thank you, and over to you, sir.
Thank you, Mallika. Good afternoon. Good evening, everyone. We have with us Mr. Vishal Mehta, Managing Director; Mr. Vishwas Patel, Executive Director; Mr. Srikanth Rajagopalan, President; Mr. Hiren Padhya, CFO; and Mr. Purvesh Parekh, Head of Investor Relations from Infibeam Avenues in this call, the analyst call for the first quarter FY 2022 results. Without much delay, let me hand over the call to Mr. Vishal Mehta, MD & CEO, to give his opening remarks and the key highlights for the quarter. Thank you. Over to you, sir.
Thanks, Sreesankar . Good afternoon to all of you, good evening to all of you, and welcome to the first quarter FY 2022 earnings call of Infibeam Avenues Limited. As we are all aware, and we know that we're witnessing a series of pandemic events and their impact on the domestic as well as global economies. As new virus strains are panning out, it seems that this pandemic is far from over. COVID has posed a huge challenge to humanity, and currently, touchless to zero contact seems an inevitable solution that helps us keep the virus or COVID-19 at bay. My reason to ponder on this issue is mainly because the future economy that I see steering towards a complete digital domination is inevitable. The world economy is at a very crucial transition phase, and I see an exponential growth in coming years for digital economy and Infibeam Avenues.
As we all adapt to digitization as a whole, and digital payments being a very vital and important part of it for keeping everyone secure from touchless transactions. The more society turns as a whole towards digitization and stores their data digitally, the more exponential growth I see for digital economy and Infibeam Avenues. No doubt, COVID-19 has pained the entire human race. Friends, whether we like it or not, this pandemic has created and been a catalyst for digitization. God has blessed us all humans with this intrinsic, indomitable nature, where we overcome sufferings and obstructions sooner or later. This nature of human race has made every entrepreneur in business fight this invincible virus in its own way, paving the path to human race for safety and success. We at Infibeam Avenues believe in looking at the bright side of every adversity and challenges.
In this challenging time, we decided to look towards the bright side and outgrow and turn all adversities to the advantage. The advantage I see for humans is a permanent digital world or digital economy. It reminds me of the famous Roman philosopher Seneca's quote, "Luck happens when preparation meets opportunity." I firmly believe that we at Infibeam Avenues aptly fit this quote. We are an excellent example of preparation meets opportunity. Infibeam Avenues for years has been prepared and created assets, building payment gateways with vast national and international clientele, data center infrastructure, processing payments at a run rate of $18 billion. We have garnered over more than 3 million merchants with full KYC. We have developed and provided SaaS-based solutions for clients, including the likes of IRCTC, GeM, several of the Indian banks, and others.
Our years of preparation will work wonders, we believe for years to come. Imagine the kind of data that we are sitting on top of. Due to years of preparation of such high-end fintech technologies and services that we have built over time, it has put us in a position to get the most out of this mass digitization of economies that has now begun in full swing. The digitization of human race for most of the world, especially the payments, is irreversible. Infibeam will soon foray into the credit business, which will be one of the biggest bets for our exponential growth. At the same time, it will be the safest bet. Of course, why safest? As I mentioned earlier, preparation meets opportunity. With the mass digitization and digitization of economies, data-driven credit lending will be the way forward.
We are well poised to scale it within a few months of our entry, as we are sitting on top of huge amounts of data, both users as well as merchants. With an upsurge of digital payments and adoption by various organizations, our user data has practically doubled in the last one year. Scaling up Infibeam Avenues profitably by multiple times via Neo Banking and data-driven lending poses an enormous opportunity for the company. Our Neo Banking and data-driven lending will be asset-light and digital-only, almost a plug-and-play format for us. Our current payments platform already has millions of customer data to whom we will be providing credit financing via strategic tie-ups with banks and NBFCs. Merchant data on our platform is growing in leaps and bounds almost every month due to the pandemic as well as our reach. We will soon reach more than 10 million merchants using our platform.
The quote of preparation meets opportunity also aptly fits here, because in the monsoon session, the Government of India has passed amendments to the factoring law. Which has now enabled as many as 9,000 non-banking financial companies ( NBFCs), to participate in the factoring market instead of just seven NBFCs. The factoring or bill discounting market is worth $6 billion in India. The factoring market accounts for only 0.2% of India's GDP, way behind comparable developing economies such as Brazil, which is at 4.1%, China at 3.2%, according to a report of the Parliamentary Standing Committee on Finance which endorsed the bill. The factoring market worldwide is projected to reach $9.2 trillion by 2025. Our credit business will be data-driven lending matrix derived from our existing business functioning, which will be deployed to tap this factoring market, starting with Indian markets.
Our CCAvenue payment gateway infrastructure is at a run rate of processing $18 billion worth of digital payments for FY 2022, and another $10 billion on GeM platform. If this trend continues, where people, institutions or organizations are adopting digitalization at such a fast pace, we may soon process more than $100 billion worth of digital transactions. Briefly, exponential growth in digitalization has led to exponential growth in data creation and massive use of online payments, which will help our credit business. We won't set up our own NBFC at present, as it is not our core business. Surely, we will have tie-ups with several strategic banks and NBFCs and other credit lending products, including business loan, working capital loan, and other parts of factoring bill discounting.
We will not only experience a growth coming from transaction fees from payments which we currently have, but also from high credit commission fees that we will receive by enabling such transactions. Why would an NBFC or a bank prefer us? The reason is very straightforward. In a data-driven lending, banks and NBFCs will get verified data on merchants, financial status, standings that have been created by merchants themselves with the years of transactions that have been passed through our payment gateway network infrastructure. This is an opportunity where merchants will be able to get collateral-free, highly competitive rate loans. Plus, credentials and credit repayment capabilities are sure to a certain extent for such banks and NBFCs. That's it from me. I'll now pass it on to Vishwas. Vishwas, all yours.
Thank you, Vishal. Good afternoon to all of you. In these challenging times, technology has been at the forefront to smoothen the business activities, especially for millions of MSMEs and small vendors who have been badly affected throughout the pandemic. Our fintech portfolio of digital payments and e-commerce SaaS platforms has enabled more than 1 million merchants since the start of the pandemic last year. Unlike what we saw in the same quarter last year, digital adoption and usage has been higher this quarter. Last year in Q1, our TPV was around INR 18,765 crore, that is 28% lower than Q4 of FY 2020. That was a pre-COVID quarter.
This can be attributed to sharp downtime in travel and hospitality business from slowdown and many other businesses, but it was also because of the relatively lower adoption and usage of digital platforms to do business during the pre-COVID period compared to now. However, COVID since has pushed businesses to adopt digital as the primary mode of doing business. We say this because we achieved a record TPV of INR 50,654 crore in 90 days in Q1 of this year. This is up almost 4.7x versus quarter one of last year. This is also higher sequentially while our core like travel and hospitality business are still below the average, but many other traditional businesses adopted digital means and new businesses with technology. First businesses, models are coming online, including individual professionals. Utility, retail, and education are among the leading contributors to this growth.
As we have mentioned in the past and on several calls with analysts and investors, demonetization set the stage for digital adoption, while COVID has surely accelerated this digital adoption. Both our businesses, payments and platforms, have benefited massively during this period. Our TPV has increased from INR 12,600 crore that were just under $2 billion in FY 2017, the year of demonetization, to our current run rate now of INR 2 lakh crore. That is almost $28 billion for FY 2022. Some new age payment options have brought the informal economy into the formal economy, which will also boost digital transactions going forward. Digital business models will eventually become a new normal. We are also certain that many old and traditional and small and large businesses will adopt online platforms for doing businesses going forward.
We are seeing a huge sector in India from conglomerates and other large enterprises expanding into digital businesses, fast-pacing their digital launches and their go-to market strategies. Tech businesses are also raising funds to fast-pace their digital journeys and expand. More than 21 unicorns have been created in a short period of eight, nine months, and many new generation entrepreneurs will also start with tech-first business models. In all this, payments will be at the center of all digital transactions. Our payment business, CCAvenue, as you all know, is one of India's oldest and the most innovative retail payment gateways, and among the most trusted by the businesses and banks, will surely benefit. Plus, the tailwinds are strong and supportive as there is ample headroom for growth. Consider this, as on FY 2021, digital payment transactions per capita per annum in India was just 33 transactions.
Indonesia was 34 way back in 2017, South Africa 79, Singapore and Sweden were way ahead at 782 and 498. Over the last three years, our assessment of online payment gateway industry shows that it has grown annually at 50% for the last local years and is currently at $175 billion as of FY 2021. Top five players contributed around 70%-75% of this TPV. We believe the industry will grow annually at a minimum rate of 25%, reaching about $550 billion in FY 2026. If this growth continues, it will reach $1.5 trillion by FY 2031. We will not be surprised to see a higher growth exceeding expectations. Various sources indicate that the number of digital payment users in the country were approx 175 million in FY 2021, which has increased to about 225 million-250 million after the second wave in just three months.
We expect the digital payment users in the country will reach 650 million by FY 2031, by when the smartphone penetration could reach 900 million-1 billion and with 250 million+ 5G connections. Digitally transacting merchants will increase from 15 million-17 million currently to over 50 million by 2031. With this, the overall monthly digital payment in India, as defined by RBI, could reach $10 trillion in FY 2031 from the $2.4 trillion in March 2021. Our payment business is always on the automatic growth mode due to the explosion digital transactions, of which we will be a big beneficiary due to the full stack of portfolio that we offer. Our payment business TPV has increased 134% year-on-year, and now averages over INR 10,000 crore every month, which was less than INR 5,000 crore in Q1 just last year.
With a multi-channel, multi-tech, multi-country portfolio, the payment business growth will accelerate. The payment business is a cart and the platform business is the horse before the cart. That's why we will elevate our growth. I will now request our CFO, Hiren, to talk about the financial and operational performance in Q1 FY 2022. Hiren Padhya?
Good evening, everybody. Gross revenue was up practically by 120% YoY to INR 216 crore as total processing volume has jumped 170% year-over-year to INR 50,651 crore. India and UAE payments, GeM and Go Payments have all increased sharply, which is contributing to the growth. Volumes have also increased very sharply to 55 million in this quarter. We are also seeing a great traction from merchants. Over 1,500+ merchants have been activated or onboarded daily in Q1. This helps us build a strong future pipeline for growth. We have experienced this with a growth in total processing volume over the last two, three quarters, and this merchant pipeline continues to be very strong. Bill Payments has shown a stellar performance. Gross revenue has increased over 1,000% in Q1 or over 10 x year-over-year.
Gross margin has increased 3x year-over-year, and we expect it to improve further in the next few quarters as transactions ramp up. Revenue in this business is transaction-based with a flat fee structure as per the guidelines of NPCI. Coming to EBITDA, our payment business EBITDA as a percentage of net revenue is over 50%, which is among the best for any payment company.
This margin is comparable with some of the top international payment companies in a similar business. Our UAE payments business generates even higher margin. Majority of business done through credit cards. Platform business also generates very high EBITDA margin of nearly 60%, as there is no passthrough like payment business. The enterprise e-commerce software is already built by us over the years, which amply fitting the quote, "Preparation meets opportunity." Now, so far as PAT is concerned, it has grown 14% to INR 13 crore compared to INR 12 crore in the same quarter last year. This combination of platform and payments is a very successful model for us and globally, also, it is well-proven. It consistently generates positive cash flow for us quarter after quarter, and our cash conversion ratio, that is cash flow from operations by EBITDA, is consistently above 100%.
With this, I hand over the floor back to Sankar to begin the Q&A.
Thank you.
Manisha, can you take the questions, please?
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the 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. We would like to remind participants that you may press star one to ask a question. The first question is from the line of Ulakal from KR Choksey. Please go ahead.
Hello? Hello?
Yes, please go ahead.
Thanks for the opportunity. It is Unnati Bhavekar . Net revenues have grown at a slower pace of 3% as per the presentation and the results that is live now. You also mentioned that it is because of strong growth in transaction processed volume has been offset partly by a fall in other operating revenue year-on-year. Can you please explain what does this other operating revenue comprise of? Whether it is subscription revenue from e-market software, whether it has weakened year-on-year or anything else is the case?
The voice is not very clear to me, at least. I am not able to hear the questions properly.
Yeah. I'll just repeat my question.
Yeah.
Yeah. You have said that the net revenues have grown at a slower pace, although the gross revenue has grown at a much stronger level. Just wanted to understand, you've mentioned that other operating revenues were the major reason behind the slower growth in the revenue year-on-year. Just wanted to understand whether subscription revenue from the e-market software side has weakened, and that is the reason why there has been a weakness in the net revenue growth year-on-year. Whether it has the same set of reasons are attributable for the quarter-on-quarter weakness also in the net revenue.
I will take this question. Basically, on the net revenue takes, it was actually 8 basis points in the previous quarter. The current quarter is actually 7 basis points. Fundamental point is that on the overall, if you really see the blended take rates. It is 6.9 basis points actually in Q4 and 6.8 basis points actually in Q1. It is actually 0.1 basis points drop in the net blended take rates on both platform business and payment business. For all practical purpose, as we have been publicly articulating, we have two horse engine actually to pull our cart. One is payments. As Vishwas was mentioning that INR 32,489 crore was our payment value for this quarter. From the transaction-based e-commerce enterprise platform, it was INR 18,000 crore. All put together, it is about INR 50,000 crore, INR 50,651 crore. The basic point is that still as you know that we started our second wave during this quarter under reference.
Still the hospitality sector, entertainment sector, to a large extent, even aviation sectors, travel sectors, and hotel sectors have not been fully opened actually on the entire pan-India basis. That is our profitable sectors actually. This is our legacy, and that is one of our profitable sectors. It has a huge business with double-digit business vertical concentration, actually. Despite that, our volumes have gone up primarily because of our BillAvenue platforms linked with our utility bills and our energy bills and education sectors and so on. That really compensated the growth. Once these sectors get fully reopened, we believe that there will be a north-based movement on the net take rates actually.
Okay. Thank you.
Thank you. The next question is from the line of Ravi Mehta from Deep Financial. Please go ahead.
Yeah, hi. Thanks for the opportunity. Am I audible?
Yes, Ravi.
Yeah, hi. I see the mention of getting into Neo Banking, the CPGS rollout globally, and so many initiatives being mentioned in the press note. I was just wondering whether the OpEx could be little bit on the higher side for one or two years to do all these rollouts, and then probably we can see the higher profitability coming in, or how does it work?
Yes, Ravi. I think you hit the nail very correctly. I think, if you ask me, there are two new initiatives. One is on the credits and lending space, tying up with banks and NBFC, for which we started investment during the current quarter under reference towards our platforms, towards our frameworks, towards our credit algorithm, and towards our overall credit solutions and so on. That phases of investments have actually started during the current quarter under reference. This kind of investments possibly may continue for a few more quarters to get into the full-fledged lending partnership with banks and NBFC and to make a difference in the lending market. As you know that our potential net basis points for our PG business is about 10 basis points on an average, and that is what the peak. Right now is about 7 basis points, 6.9 basis points, and so on.
On the lending, the margins are multifold higher. Therefore, lending is definitely the accelerated growth driver for the company, and that is what we visualize. That is what as a vision statement Vishal had made as a roadmap in the beginning of this conversation that we are entering and foray into the credit space. Therefore, this is not the new roadmap and which we have publicly articulated in September 2020, that we are getting into the Neo Banking. For that, actually, we have a GRIT card issuances platform. For that to start the lending, we have started the Express Settlement. Ravi, as you know that we talked about in Q4 and also Q3. Fundamental point is that our run rate, we started in a bootstrap from zero on express settlement towards part of our lending.
By the end of FY 2021, that is last year, our run rate was roughly INR 3.5 crore per day, which is about roughly $100 million. Now based on our Q1 run rates, we have actually almost doubled it. We are doing now on an average INR 6 crore per day. This would mean that we have guided the market that we will double the run rate of our express settlement from $100 million to $200 million. I think we have almost doubled even by the end of this first quarter. Based on the current run rate, now today, we are doing express settlement of little over $50 million on a quarterly basis. This is one of the profit driver. Therefore, Neo Banking in a way towards express settlement on a secured lending is already started. This is not enough.
We see a bigger opportunity in the lending given the fact that we have a huge database of merchants and we are invested. We started investments in a phased manner towards various credit algorithm, frameworks, solutions, technology frameworks and solutions. With the merchant database, which is a data-driven approach, we believe that we will be able to attract the top banks in the country towards partnership. Banks are willing to really do that, because they lack this kind of an onboarding process. We believe that that is going to be a good opportunity for us because the market size is three-digit in billion dollars. Even if we get actually 1% or 2% of that over a period of time, that is going to be a huge loan book actually for us. Of course, the caution statement is that we are not exposing any credit risk.
We are the enablers. However, we make actually huge billing through our solution. That is basically the strategy. That is we have started, and you will find little bit effect actually on our margin percentage in the next few quarters because of this initiation. This is going to be a cheap capital which we are doing out of our internal accrual for the future growth, actually, Ravi. In that sense, you are absolutely correct.
I believe nothing will be capitalized in the balance sheet. Everything will be expensed.
Yes.
Sure. Any aspiration of what kind of lending book you aspire to reach once you are tapping this opportunity tying up with NBFC and banks?
Market opportunity is huge. It's very premature to really numbers. Any number is a good number, actually. The opportunities is really very huge. The challenge is that to build the nice credit algorithm and programs and the technology solutions linked with our huge database of our merchants. In addition to that, we have existing relationship with the large players. We believe that we will be able to leverage that relationship to boost this lending business.
Okay. The target market would be somebody beyond the reach of banks or readily preferred the NBFCs or who would you target?
The target would be, banks and NBFCs are our credit exposures and BIN exposures actually partners. For all practical purpose, the ultimate loan takers are, I would say, end merchants actually to a larger extent could be SMEs and MSMEs, even corporate players. A bit of the high-end, low-end, and all these kinds of combinations actually, because exposure is going to be taken by the banks and NBFC. Of course, we have some moral responsibility, but not a legal responsibility. Our role is basically an enabler role and to make sure that we get a end-to-end success actually through this lending model actually.
We won't be giving any kind of some credit guarantee or something like when we generate a loan.
Under regulation, we cannot really neither take the credit exposure nor give any LOGs or guarantees and so on. This is under regulation because we being a PG player. That is what we are partnering with banks and NBFCs.
Okay. Thanks, sir. I will come back.
Okay.
Thank you. We would like to remind participants that you may press star one to ask a question. The next question is from the line of Santhosh. Please go ahead.
Yes, hello. Good evening, everybody. My question is kind of a generic one, which is, I just want to inquire about the e-commerce platform enterprise for Jio, JioMart specifically, whether it is for website as well as Android app. Whether we are giving services for both. The second question would be whether the payment gateway was active because the last time I checked, it was being directed to PayU Money .
Right. Basically, that mobile and app space is definitely in the roadmap and it will eventually come. As far as the payment processing is concerned, I think we completed the white labeling process actually with Jio, and it has gone live. As in the past, we will continue to compete with the other players to grab more PG business actually through our relationship.
Okay, thank you.
Thank you. We would like to remind participants that you may press star one to ask a question. The next question is from the line of Sreesankar from InCred Research. Please go ahead.
I have a couple questions. My first question is, the way we have moved into Middle Eastern markets and gaining traction over there and has been doing pretty well. What is your roadmap going forward to go internationally? I'm asking this question despite knowing that there is a tremendous opportunity domestically itself for us to grow. I would understand that the take rates are going to be much more on the higher side in the international markets than what it is locally because of the serious competition out there. Can we have some roadmaps?
Which ones?
Yeah, I'll take it, Srikanth.
Okay.
Okay. I think the strategy for us is very clear. We have two different products. One is CCAvenue payment gateway, which is a direct-to-merchant strategy, where we onboard the merchants, and we have direct merchant relationships. The second is our CPGS product. That is the CCAvenue payment gateway service product, where we give this entire tech of CCAvenue payment gateway along with the switch, and we can do an on-prem deployment for any banks. Our strategy in the Middle East is very clear. Where the markets which are huge and potentially very well developed with smartphone penetration, we want to have a direct merchant relationship and we have to go there. That strategy, we are already there. If you look at the Middle East, even at the GCC region, right?
We are there in UAE, and we have direct merchant relationships with thousands of merchants, do around AED 2.75 billion processing every year. All the top merchants there, be it Emaar, Nakheel, Burj Khalifa, Etisalat, all those are our merchants. Similarly, we have started that direct-to-merchant aggregator relationship in Saudi Arabia. There is the other CPGS product, which we do in the smaller markets, which does not work well to have a direct merchant relationship. CPGS is what we get. In the market of Oman, small market, 3.4 million population, we have deployed a CPGS product. The biggest bank there, Bank Muscat, which has almost 80% market share, is using CCAvenue payment gateway for local merchants there. The number two bank in Oman, Bank Dhofar, is also using our payment platform.
We intend to have a similar strategy in smaller markets of Kuwait, Bahrain, and Qatar, et cetera, and also some part of the North Africa market also. Right. While direct merchants relationship, we might will be launching soon in U.S.
Just delayed because of the COVID-19, but we've already done an acquisition there. The strategy is to hold, as I said. For bigger markets, we want to have direct merchant relationship with the CCAvenue. In a smaller market, we'll go with a CPGS product where we give the entire tech, where we earn on every transaction, on every merchant ID opened and other things from the banks.
Okay. If I take this forward further, does it also mean that when you are operating in the international markets, the backbone will be based out of India? More like an offshoring part of the business, so that you will be able to manage your cost better? That's my first question. Second is, we are more in a SaaS product, FP . Unlike in the IT services, which is time and material. Our scalability as our revenue scales up, our incremental employees that is required or the staff that is required, personnel required is going to be much on the lower side. Can you please explain in terms of the scalability of this model?
If you start the number of transactions starting increasing, do you require to have more number of persons on board or is it that it's only the business development or the sales side which will increase?
Right. I'll address your first question first. Look, as far as growing the pie where multiple markets are there, right? It is not people-centric, whether how the transactions scale up. Both in a digital format, if you have seen our numbers, we have doubled the entire platform in this business from what we were last year to now INR 50,000 crore worth of the same transactions in this quarter. Our team size is still around 650-odd people across both the platform and payment business. If you put it similarly in a UAE market that we do today here, AED 2.75 billion processing yearly, there are less than seven people there. Right? It is not dependent as SaaS. It's a SaaS.
It's not like a normal SaaS fee where you need to add that or an offshoring business like a Infosys or Wipro where you get a contract and then you have to hire the people. Ours is very scalable technology, where from last year to today, around INR 50,000 crore in a quarter, what we are doing today, is quite different. Quite different and quite I mean, it can grow automatically without putting the requisite resources. Similarly, when you put up in international countries, right? Now the regulations are changing. As countries around the world try to mimic what RBI has done on data localization and local payment options. Right? That strategy is changing. That also gives a push into the major existing providers who have been traditionally using solutions hosted at U.S. and other places. Right?
For us, even in Bank Muscat and others, we did an on-prem deployment here from Mumbai. Right? While all the other related people that are required, maybe the data might be hosted there within the bank premises, with a bank data center or a private cloud within the bank. The entire services is handled out of here. Our risk experts who set up the risk and compliance fee, everything is built out in Mumbai and even for UAE, Saudi and Oman and even now U.S., all will be handled from Mumbai. It's a low-cost center here, and good money can be charged to these banks for these services on their behalf. That's the strategy how we are moving forward, Sankar.
Sankar, in addition to what Vishwas is saying, basically a global delivery model. Basically the delivery is happening from the Mumbai jurisdiction. The local guys are all actually mostly, I would say barring one or two, who are tech in nature and evangelist, and otherwise, they're all BD guys and so on, so forth, relationship and BD guys and so on, so forth. In terms of revenue model, it is broadly 100% of our payments are all transaction-based. The fee could be actually fixed fee based and rate based and all that. Basically these are transaction-based. Therefore, it is not linked to any human resources in any manner. On the large e-commerce platform side of our business, it is exactly like actually a product business of any large IT players.
We have a very large SMEs and MSMEs and medium enterprise and even for that matter, actually retailers' online platforms, which we have an ability to really license and so on. We don't limit that. Nevertheless, that be it a large enterprise customer or MSME, SMEs or even retail customers for that matter, on the large e-commerce enterprise platform, our people are actually in common because they are all hardcore domain specialist people and platform specialist people and product specialist people, and they are out of actually Bangalore. From that perspective, numbers are not linear actually to any human resources. As you could see that, on the GeM processing volume and value, basically, there is a set of people actually working from the Bangalore team and the Delhi team, and revenues are flowing into the system actually based on the order processing value.
It is completely linked to the transaction. That is the beauty of this business actually.
Okay. Thank you.
Participants to ask a question, you may press star one now. The next question is from the line of Het Choksi from KRChoksey. Please go ahead.
Yeah. Good evening, congratulations to the entire team for a fantastic progress in the last one year. My question is a little bit strategic. Around April 2020, we acquired a company called AI Fintech, which is into mainly digital payments and digital platforms, and consumer lending across industry verticals. You acquired various companies like Instantpay, IGPL, and Cardpay Technologies. Now, these companies have already been acquired since some time, but as an investor, I would like to understand how is the company trying to position this company and integrate across various services? The second question would be, since you are talking of the data which you plan to monetize across consumer lending and maybe digital credit lending, how is it that this aligns with foreign payment banks and at the same time, merchants would also facilitate lenders?
I understand every country doesn't allow monetization of their data and clients. What is the roadmap of the company, and how do you plan to mitigate some of the risks going forward in this space?
Okay. Vishwas here. Let me take this.
Okay.
Looking from a perspective, AI Fintech LLC was taken in U.S. because we planned to launch U.S. since we have many company there to launch a solution. Unfortunately, with COVID and the flight cancellations, we've not done it. As far as two other companies that you mentioned, right? That is Cardpay, which is now under a subsidiary of the other one, Go Payments. Right? That is the global front that is there. Recent global effect, you have seen the result is already on a run rate, both are post becoming a majority-owned subsidiary, is already at a run rate of a $1 billion TPV goal, right? The whole idea here is that within CCAvenue, what we do on platforms, platform and payments is one part, and the entire backend, entire of the payment is concerned. Go and Grit, that's one part.
They do the assisted commerce business. They have like 40,000 relationships across 1,200 cities and towns where they give all the assisted commerce services. Within Cardpay, they will do the entire issuance network, giving credit through an issuance network. That is the corporate cards and other part, that's where Cardpay comes in. The technology and other things that has been built out in Cardpay will be launched to give out that corporate cards and lending through cards, right? The entire issuance network, while payments is acquiring the entire issuing network along with assisted commerce, will bank within our majority-owned subsidiary, that is Go Payments. Right? That is one strategy that is there. The second investment strategy also, you now mentioned two other ones. One is the new NUE that we are setting up in partnership with Reliance and two other global leaders.
That's to do the network business like a Mastercard or a Visa. Visa, you all are aware, is a $0.5 trillion market cap company present globally. Like Visa, Mastercard, this NUE will do that kind of a network business like Visa, Mastercard and NPCI, and has global aspirations. Our other investment is in RemitGuru, which is now Fable Fintech, which is already doing around INR 11 billion of inward remittances. International remittances and platforms will come within the Fable Fintech. That's the investment thesis. The entire acquiring and the platform is what we are doing within IA. Our investments in Go, which is a majority-owned subsidiary, Go and this thing, is on the issuing side and on the assisted commerce side. The international remittances is through Fable Fintech.
The NUE business, that is the network business, will come under the new investment that we have made through investee SoHum. Yes, we've got a certain event overall.
Yeah.
All aspects of our fintech.
Yeah, absolutely. I think this part is very clear. I think what I want to understand is that the NUE, the license which is scheduled in this fiscal year. Most likely the company should be able to pursue it given the strong technical strength which the company has. How do you see integration of these with this NUE platform? As I understand, you want to have a converged platform to do this lending going forward. Can you help me understand? On one side, we are increasingly seeing.
Lending is very clearly a strategy for India, within India, within our platform and payment business. It is not through the remittance business where we are invested or through the Go Payments, only that limited lending on the corporate card or through the NUE. NUE is a different discrete business altogether, which we are investing. In a payment ecosystem, the card network sits on top of it. Having a national switch where all the banks connect in, that's very important to build our version of UPI, our version of this. Network business is quite different. The lending piece that you are talking about, Het, is very clearly within the Infibeam Avenues business what we are doing within the platform and the payment business. It's not for international also.
We have no plans right now looking at international, where the interest rate is quite submerged right now. This thing, in India it's a huge opportunity. There's a huge credit uptake and there's a huge demand from SME and MSME to kickstart post this pandemic. We are very focused on that and with the kind of rich data and the new kind of this thing that we are doing, the kind of algorithm, the artificial intelligence and machine learning that we are putting in on the merchant data across our various platforms and payment business. It gives us very refined knowledge which is not available to traditional banks to do very secure, safe lending with very negligible NPAs that can be done on it.
Vishwas , if I can rightly put just a follow-up here. What I understand, looking at the global payment business and global consumer lending business and digital fintech, is that brands which have built more digital retail-facing franchisee or brand recall, they've done extraordinarily well over a period of time. Infibeam is extremely, very powerful as a company in the B2B space. Since you are going to venture into maybe eventually direct consumer lending for B2B, I would like to understand how will you position your brand into the consumer space?
Here I am very clear that there are two strategies. There are lending to consumers, which can be in multiple fold. Consumer lending, instant loans, whatever. Then there is a lending to corporate SME and MSME. Right? We are very clearly focused to be on lending onto an SME, MSME or corporates where we know the default interest can be negligible and the data that we have of their multi-processing and the different ways of recovering money is a very clear strategy here. For us, lending to SME, MSME will do that. As far as consumer lending is concerned, we are very clear that we are going to act as an aggregator of all consumer lending apps that are there in the market.
As a CCAvenue payment gateway, when you see on the checkout whether you want to convert into buy now, pay later, we will include everything that is available in the market and make 1% or something of the transaction amount upfront without taking any risk on other things. We very clearly understand that if you want to recover, say, if you give a consumer loan for INR 4,000 to a person in, say, Ahmadnagar or Muzaffarnagar or Itanagar, you know it's going to be very difficult to recover that INR 4,000 to take it in case you default, right? We don't want to be on the consumer lending space for small amounts and other things, right? We want to be an aggregator.
If there's a Bajaj Finserv EMI there on a pay now later or a Simpl or any others, we are aggregating all those that are market, and we are going to earn on a transaction upfront, which will be equivalent to the interest what you would have anyway charged if we had given out the direct link, so without taking any risk. Consumer loan, we are acting as an aggregator, while SME, MSME, with the rich data that we have, we are going to do direct lending.
I think great clarity. Probably we'll catch up some other time later. All the best to you for the rollout and good luck for the full year then.
Right. Thank you.
Thank you.
Thank you.
Thank you.
Thank you.
Thank you. The next question is from the line of Sreesankar from InCred Research. Please go ahead.
Yeah, I have one last question. See, one of the reasons why your margins have slightly squeezed is the areas where you get higher margins like aviation, travel, et cetera, has been on the lower end, right, and education, et cetera? What you see in the increasing increases, we expect to see a better improvement in margins , is it a fair assumption?
Yes, Sankar. That's what I said earlier. There are two reasons why the margins have slightly contract in this quarter, primarily because of the point which you mentioned. Once those sectors are completely reopened, then the net take rates will actually go towards. Second thing is that since we have started investing in the credit algorithm investments and framework investments and technology solution investments leading towards lending business as a facilitator and enabler actually to the banks and NBFC to capture a larger piece actually for our growth. That also taken a bit of hit actually, and that hit may likely to happen in the few more quarters also. That is basically a seed capital which we have to really invest. Without that, the lending growth will not really happen.
We would want to be a differentiating factors also that for the banks and NBFC because almost other PG players may also enter into a solution, maybe a different solution. We want to be a value differentiator actually on the technology value differentiator. Therefore, the investment into that kind of a business is very important. That also one of the reasons why it has taken a little bit of hit. That is basically the broad reasons actually for our hit. Once the sectors will get reopened and I'm very sure that the net take rates will go actually upwards.
Once you start seeing more number of the merchants that you have onboarded, and your presentation talks about closer to 1,500 per day, et cetera. That starts yielding returns also, we should start to see improvement in margins, correct?
Yes and no. That is basically coming part of our business, actually, because our growth actually of FY 2021 was $19 billion. Today we are talking about $28 billion, $29 billion. INR 50,000 crore means INR 205,000 crore actually. INR 205,000 crore on an annualized basis, which means about, say, $29 billion. That is actually bundled for our extra onboarding of customers, merchants. 1,500 actually daily onboarding is not a joke. It's a huge number, actually. That's a lot of bundle. That has maybe have an impact actually on the profit, but that is not the main reason. That is the main reason for the growth. The profit driver would be actually contracted because of this one, actually.
Good. Thank you.
Thank you. The next question is from the line of Sri Karthik from Investec. Please go ahead.
Yeah, hi. Thanks for the opportunity. I have a couple of questions. Recently, RBI has allowed payment gateways and other PPI providers to circumvent the acquiring banks and have a current account with the RBI itself. I wanted to understand what will be the impact of that and benefit of that for us as a payment gateway. That is one. Secondly, whilst I understand that part of the reason why the take rate is going down is because of the discretionary spend associated with travel, et cetera, what is the impact of the increase in UPI transactions in the transaction mix, which is affecting the take rate? Those are the two questions.
Okay, I will take the second question, and maybe Vishwas may address the first question. Vishwas? By design, strategically, we are staying away from the UPI base, actually. If you really see our UPI-based transactions quarter on quarter, this is by design, that our typical concentration of UPI is always in the range of 3.8%-4%. It is actually less than 4%. I think that is manageable. You cannot avoid, but that is manageable. I think going forward also, we will have real-time mechanics and analytics to make sure that we are not exposed to UPI in a bigger manner. The reason is that we don't get anything actually significantly better with the UPI. However, we should be present actually over there. That's the strategy.
Right. Do you currently charge a ton on a UPI transaction as a payment gateway provider because your website still says 2%?
We are not charging. No website says 2%. We are not charging anything for UPI. UPI and RuPay debit cards, whatever is discussed by the finance ministry, we are following that to a T. Focus on getting non-UPI merchants is what their strategy. Overall base, we can just said that we are at around 4.5% of our overall volume on UPI. On your second question on RBI allowing us direct access, yes, there is a good opportunity for us with participants to directly do payouts using the RTGS on the payment infrastructure. We're still awaiting our PA licenses from the RBI. Post that, we'll be able to do that. More importantly, what it helps is on the card issuance side within our subsidiary company, Grit, where we don't necessarily need an acquiring bank, issuing banks to issue a Mastercard Visa.
It will be a direct network-level access to us where we can work bypassing and save on the fees that currently we paid to an issuing bank, a margin. Margin is better in that card issuance business that we have. While NEFT, RTGS, and other access, some business models will evolve. Too early to predict what more we can do with that kind of an access directly without a bank participation.
What is not very clear in the directive, or at least my understanding isn't so great, is the confusion pertaining to NEFT and RTGS. What we could make out is these are pertaining to Would this particular account that you'll be opening with RBI will be helping out only in the NEFT, RTGS transactions, or even the credit card and other payments can be routed through this current account?
Just like you, we also have 101 questions on this, how it will operationalize. Right now, as they've said, they have just done it through PPI. For a PPI, it's very simple because the balances that are there in a wallet are very simple that they can use it and transfer it out. How it will work out for a bigger ecosystem like PAs or payment aggregators like us, and specifically on the issuance side, it's still not clear. I think coming days, when this is operationalized and works for the other guys, then maybe a business model will evolve.
Sure. If it's okay, I can squeeze in one more. Which is a payment switch provider that you use currently?
We have a payment switch of our own. We use multiples. We are connected via eight acquiring banks, including all the big banks like HDFC Bank, SBI, ICICI, Kotak Mahindra, Punjab National, Bank of Baroda, Axis Bank. There are various solutions and switches that they use. We also connected with a Lyra switch and many other switches that are there for our deployments in international markets. We have our own switch also, which will go after, of course, the certification process to make it live. That's where it is.
Okay. This is very useful, sir. Thank you so much.
Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Sreesankar from InCred Research for closing comments.
I thank you, management, as well as all the participants who participated in the call. Thank you very much.
Thank you.
Thank you. On behalf of InCred Research, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.