All guns blazing: Behind PayU's robust strategy for growth in India

Online payments gateway PayU India has two things going for it—a strong, locally-rooted technology stack and the backing of global investment firm Prosus. On this leverage, the company has built a successful payments and credit business in India by creating indigenous products, while at the other end, it has either built, acquired or partnered with entrepreneurs to lay the foundations for a broader fintech ecosystem.

PayU India, which is fully owned by Prosus, is the largest payments service provider in the country by share of revenue. Payments, which constitutes two-thirds of its revenue (nearly 15 per cent comes from its subsidiary Wibmo), grew by 49 per cent year-on-year to $304 million in FY22. CEO Anirban Mukherjee says total payment volumes grew 60 per cent in H1FY23. On the credit side, revenue stood at $40 million in FY22.

PayU India has been profitable for the past 18 months.

“There is a very significant opportunity in payments. You will only win when you solve deep customer problems and there are still many problems to be solved. India has 30 million-plus large- and medium-sized merchants. If you add small merchants, it will be 60-70 million,” says Mukherjee.

PayU is one of the launch partners for National Payments Corporation of India’s subscription payments feature UPI auto pay. The company is strengthening its ‘credit on UPI’ feature that enables small-ticket lending to customers. Mukherjee says the firm is building sachetised products around it to lend small amounts—in the range of Rs 5,000-10,000—to merchants for a period of 7-30 days.

In 2022, PayU India tokenised over 65 million cards with PayU Token Hub and enabled 30-second refunds for 90 per cent of transactions.

Mukherjee expects credit on UPI, omnichannel payments, merchant lending, SMB receivables financing, affordability and checkout financing to become large opportunities in 2023. PayU India is currently in the process of reapplying for a payments aggregator licence based on feedback from the Reserve Bank of India.

“All of PayU India is built in India, by Indians. So, our understanding of the customer problems is very first hand. For Prosus, India is the No. 1 market across all segments. Besides the investments, we get tech advice and help from Prosus as it sees many such use cases across the world. We leverage some of that experience to solve problems very locally. It’s a win-win partnership,” Mukherjee says.

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