Airtel Payments Bank’s monthly transacting users to cross 100-mn mark

Airtel Payments Bank, Bharti Airtel’s fintech arm, will likely clock over Rs 1,300 crore in revenues in FY23, a year-on-year growth of over 40%, according to people aware of the matter.

The reasons for the strong revenue growth can be attributed to a significant surge in the monthly transacting user base and cash management system business, increase in fee income from cross-selling of financial products like insurance and loans, etc, and growth in consumer deposits.

In FY22, Airtel Payments Bank reported revenues of Rs 941 crore and a profit of Rs 9 crore. The company is targeting to list on the stock exchanges in the next 2-3 years and has started talks with certain strategic investors before coming up with its initial public offering (IPO), sources in the know said.

“We were profitable in FY22 and since then we continue to make profits every quarter and will exit FY23 with profits,” a company executive said. “The deposits which customers have with us, the transactions which customers do with us, and the ability for customers to pick up financial services give very high margins to the company and working very well,” the executive added.

“With strategic investors coming in, there will be credibility and more merit in working closer. With the partner group possibly being in the same space, it helps drive the business meaningfully,” the executive said.

Airtel Payments Bank currently has over 155 million customers, of which 57 million are transacting every month. The company counts a customer as monthly transacting if he or she has done a financial transaction in the last 30 days. In FY22, the company had 43 million monthly transacting users.

Apart from this, the company currently processes around 600-650 million transactions every month, and has an annualised gross merchandise value (GMV) ofRs 2 trillion, an increase of 46% from Rs 1.37 trillion in FY22. Similarly, customer deposits during the current financial year grew over Rs 1,500 crore fromRs 1,176 crore in FY22.

“Over the next 3-5 years, we definitely see our monthly transacting users crossing the 100-million mark,” the executive said, adding that schemes like reward programmes where customers get cashback benefits on every transaction, the recent launch of new debit cards, and more offering of financial products will help drive the growth going forward.

Currently, Airtel Payments Bank gets about 70% of its revenue from the payments or transaction business, 25% of the revenue comes from fee incomes, that is, by cross-selling financial products like gold loans, insurance, etc, and 5% of revenue comes from consumer deposits.

To grow its fee income, the company recently launched its physical debit card in partnership with Mastercard. The issue price for the same isRs 349, and it comes with a daily transaction limit of Rs 25,000. The company has also partnered with Care Health Insurance to offer mediclaim policies to its customers.

“Data shows that debit card spends are growing at almost 12-15% y-o-y for the last three years, and it is upwards of Rs 1 trillion a month. Cash withdrawal from ATMs is Rs 2.5 trillion a month. So, between an ATM cash withdrawal and use of a debit card, it is approximatelyRs 3-3.5 trillion a month kind of the market size,” the executive said, adding that the debit card offering is going to give massive growth to Airtel Payments Bank going forward.

Apart from the consumer segment, Airtel Payments Bank is bullish on the business-to-business segment space, with its key offering of cash management system (CMS) to most banks, non-banking financial companies (NBFCs), and micro-finance institutes, among others.

Simply put, CMS helps an agent of a micro-finance company or an e-commerce company to deposit the cash collected from customers in the nearest Airtel Payment banking point or with the company’s registered business agents, to make it seamless for these companies to manage cash. Similarly, customers can also deposit the cash themselves with the Airtel Payment banking points or with the agents.

“We are getting strong traction in our CMS business and going forward, we are also looking at other ways of digital collections for our customers on a smartphone and feature phone,” the executive said, adding that the National Payments Corporation of India (NPCI) is testing digital payments through feature phones with Airtel Payments Bank.

“We have exclusively partnered with NPCI for solutions like using the camera of feature phones to actually scan and make a payment. Second is using interactive voice response (IVR), among other use cases,” the executive said.

The company is confident of registering strong double-digit growth going forward on the back of growing digitisation in the smaller cities as well as its cash management system.

Airtel Payments Bank was among the first of 11 players — only six are operational now — to receive a payments bank licence from the Reserve Bank of India (RBI), in 2016. The company competes with the likes of Paytm Payments Bank, India Post Payments Bank, Fino Payments Bank, Jio Payments Bank, and NSDL Payments Bank. Financial Express