Bridging The Payments Gap

Joining a well-established family business and creating further value out of the same is a given, and a convenient option. However, coming from a family with businesses in automobile and jewellery, and launching a completely new business is not everyone’s cuppa. Vaibhav Lodha has achieved this tough task with FTCash, a digital payment service, and has carved a career in a field that touches people’s lives on a daily basis.

“The satisfaction of work was what I craved for,” says Lodha, who started out as a consultant and spent eight years across five countries and 20 Indian states working with top organisations such as Swiss Bank, World Bank and other groups in public policy and development.

It was Lodha’s milk vendor who fuelled his entrepreneurial zest and gave him an idea to launch FTCash. “At the end of the month, the newspaper vendor and the milk vendor ask for money and the immediate response usually is to ask them to come back later. We, too, had these issues. It is an inconvenience for the merchants also. So, we tried and figured out a way, which makes sense to these guys,” explains Lodha (33), who researched how challenging it is for merchants to afford portable machines for cashless transactions especially in geographies with low Internet penetration.

A solution had to be found using the existing infrastructure — the bank accounts seemed to be the answer. This led to the creation of FTCash, a digital payment gateway, which allows any merchant with a feature phone and a bank account to accept a variety of cashless payments — including payments from credit cards, debit cards, mobile wallets and PayPal. More than 25,000 merchants have signed up so far and the company has been growing 30 per cent month-over-month for the past 18 months.

Running a startup with a rural connotation was not a huge challenge for Lodha, who, in the past, headed India and China operations for global companies in similar fields. However, cracking India’s unorganised sector and reaching the bottom of the pyramid was a huge challenge. His conviction in the business model and the product was so strong that he never feared failure but was ready to work harder to avoid common pitfalls.

Today, FTCash isn’t just providing payments technology. Lodha mentions that these merchants often have trouble getting loans from banks due to their limited financial records, making it difficult for lenders to create “a credible risk model.” While FTCash doesn’t actually provide the capital for these loans, it has financial partners that do. The interest rates for these loans are comfortable compared to the levels charged by the non-reliable credit sources the lenders usually rely on.

Lending comes as a part of Lodha’s strategy to keep innovating and adding value to the business model. Speaking about the growing competition, Lodha explains how there are over 60 million micro-merchants in India and less than 1.3 million POS (point of sale) machines.

“It is not a winner-take-it-all market,” says Lodha. “Considering the coverage is less than 2 per cent, it allows sufficient market for multiple players to co-exist without the fear of winner-takes-all. We need to be consistent with our growth and make sure that we innovate constantly, solving everyday problems. The offering must not become outdated,” he says.

FTCash doesn’t believe in ‘discount policy’ of any sort, adds Lodha. The management makes sure that the money is used in a sustainable fashion to scale up. At the same time, it helps the company reach the profitability scale in a quicker span. For FTCash, the future lies in empowering micro-merchants with services that go above and beyond payments and loans.

Finally, what keeps an entrepreneur motivated? Lodha says, “For me, I like working on products and ideas people did not know they have. Fintech is the biggest example. I tend to keep myself aware of the needs people could have, which you anticipate from yourself.”