Prosus-backed PayU's India playbook: Focus driven by fintech opportunity

PayU CEO Anirban Mukherjee said the company was adopting an 'India-centric' approach, which was driven by the inherent advantages the country offered compared to other markets

India is at the centre of Prosus-backed PayU’s business strategy, as the Netherlands-based investor sold its payments business in other international markets.

Adopting an ‘India-centric approach is driven by advantages in India compared to other markets in the world, said Anirban Mukherjee, CEO of PayU.

“We are investing heavily to strengthen controls and governance. We were always good. But there's a chance to be world-class in this sector. One has to take a lot of time, effort, and spend money to get better at controls, and governance which includes fraud and risk management,” he explained. 

The focus on compliance assumes significance in the wake of the Reserve Bank of India (RBI) barring Paytm Payments Bank from operations.

“The focus remains on our India-centric strategy and leveraging the progressive policies and frameworks set by the RBI and the government to foster a robust fintech ecosystem,” he elaborated.

Mukherjee is speaking for the first time since Prosus exited PayU's Global Payments Organisation, which had a presence in over 30 countries across Latin America, Central and Eastern Europe, and Africa. 

The interaction took place before the RBI crackdown on Paytm Payments Bank.

“A global shift from seeing the world to India plus a few target markets such as Southeast Asia and Turkey is the biggest shift. If you asked me, one big shift we made was to change your strategy to make it completely India-centric. We see massive opportunities here relative to the rest of the world,” he explained.

PayU’s GPO was acquired by startup Rapyd for $610 million in August last year. The deal excluded PayU’s India, Turkey, and Southeast Asia operations. 

At present, PayU has a base of over 5,00,000 merchants in the country. It operates across three business sectors which include payments, credit, and PayTech generating over $60 billion in annualised volumes. 

The company is looking to tap into the consumer credit space eyeing a demographic that is young and increasingly affluent. 

The company’s lending arm, PayU Finance provides consumers with short-term loans that can be availed in the form of small-ticket credit, express loans, and others. The company is focusing on lending to the SMB (Small and medium-sized business) space targeting merchants. 

“We see significant opportunities in consumer credit with the young, emerging affluent consumers. We also see an equally large opportunity in SMB credit. Both on consumers and on SMBs, we see significant opportunity, and that's what we are focused on,” he added. 

Mukherjee said there’s enough scope to solve merchant demands, and in India, companies cannot take their ‘eyes off the ball for a minute’ explaining the nature of competition in the space. 

When asked what the company intends to do with the Payments Aggregator license from the RBI, Mukherjee said: “We have resubmitted our application to the RBI, and are awaiting a decision. One of the key aspects they wanted us to do was simplification of our corporate structure. We have implemented a substantial part of the structure simplification proposals that were recommended by RBI.”

In response to Business Standard’s queries sent in December last year on the business strategies due to a pause in inducting merchants, the company said it had diversified its model. 

Mukherjee said an Initial Public Offering (IPO) is one of the options as the company matures. Prosus’s interim CEO Ervin Tu in November last year, said PayU is seeking an IPO in India by the second half of 2024 (H2CY24). 

“As we strengthen our controls and governance, compliance, and all of that which is a regular part of the business, a lot of that helps you also get ready for listing. We will soon have a board with independent directors, which is one of the next big steps. You basically run yourself like a listed company, and then this thing is just an event someday,” he added. 

PayU India reported revenue of $400 million for FY23, a growth of 31 per cent year-on-year (Y-o-Y). Its India credit business grew 112 per cent to reach a loan book of $256 million at the end of FY23.