Summary
The fintech category was fighting to win small merchants' trust, but merchants believed that nobody trusted THEM.
Challenge
Objective: Increase revenue driven by micro and macro loans to small merchants STRATEGIC CHALLENGE FOR BHARATPE: HOW COULD BHARATPE, A LATE ENTRANT, WIN THEIR AUDIENCE - SMALL MERCHANTS' TRUST AND TRANSACTION SHARE?
Objective
MEET THE HEART AND SOUL OF BHARAT'S ECONOMY: SMALL BUSINESS MERCHANTS: FROM TOWNS TO SMALL TOWNS, URBAN CITIES TO RURAL VILLAGES 63 million MSMEs employing 113 million people contributing 30% GDP 45% of manufacturing output No wonder India's fintech supremacy battle was fought for their preference. With the latest battle being fought to dominate the digital payments. And the only way to win was to get the largest share of transactions. Which could be only achieved by winning the merchants' trust. From established giants like Paytm, PhonePe to new fintech startups, the category has been crowded, competitive and growing; with every player trying to push their QR scanne
Strategy
To win their trust, BharatPe had to understand their challenges, dreams, and goals. BharatPe embarked on a mission to understand these small merchants across India, from kirana stores, parlous, tailors to chaat corners. What do small businesses go through? Most of these small merchants, especially the ones in small towns are family run or first generation of business. They have small shops but big dreams. But problems hindering their dreams come in all shapes and sizes. Barriers faced by small shop owners: - 1.5% transaction fees on digital payments - Power distance from big financial institutions, leading to lesser credit access - Banks rejected them or asked for complicated documents or jewelry as guarantee All of this led to a lack of capital to grow their small shops. The merchants believed that it's very easy for a working professional or a big business man to get bank loans, but when it comes to them, they find it impossible to get any loans. And the data agrees, just one-fifth of the financing gaps faced by MSMEs were filled by formal credit, leaving 85% of MSMEs underserved in terms of credit. BHARATPE DISCOVERED A HARSH REALITY: INSIGHT THE CATEGORY WAS FIGHTING TO WIN SMALL MERCHANTS' TRUST, BUT MERCHANTS BELIEVED THAT NOBODY TRUSTED THEM. They saw barriers like loan collaterals, guarantors, documentation, high transaction fees, and inaccessible banks as a proof of that. The irony was that they are the economic growth assets, but institutions saw them as liabilities. STRATEGY BharatPe realized that the first step to winning their trust was to show our trust in them… however small their businesses were.
Data
THE CATEGORY WAS FIGHTING TO WIN SMALL MERCHANTS' TRUST, BUT MERCHANTS BELIEVED THAT NOBODY TRUSTED THEM. They saw barriers like loan collaterals, guarantors, documentation, high transaction fees, and inaccessible banks as a proof of that. The irony was that they are the economic growth assets, but institutions saw them as liabilities.
Solution
Results
BharatPe's business innovation and marketing efforts have been focused on serving the financial needs of small merchants. From its unique business model to marketing efforts to on-ground shop renovations to collaborations with NITI Aayog - it's to become the growth partner of small merchants. The results were seen from far and wide. BharatPe saw a massive rise in digital transactions outside of its top-30 cities as merchants shifted to digital payments for convenience and security. With 2.5x growth in payments and a 4x jump in revenue and a valuation of $2.9 billion, BharatPe has recorded its best-ever quarter in Q1, FY23. The results were reflected in: 1. Higher monthly transactions 2. Merchant on-boaridng 3. Growth in active merchants 4. Growth in loans and loan amount disbursed
