A decade into the firm’s journey, Parekh says it has implemented offline payment solutions for transit ticketing and toll payments. In a conversation with ET Digital, Parekh talks about the genesis of the company, how tech solutions make a difference to urban mobility and the company’s plans. Edited excerpts:
Economic Times (ET): What does PayCraft provide and how did it start?
Ambarish Parekh (AP): The founders are payment industry veterans, and we have known each other since 2015. We always hoped to collaborate to create a strong brand capable of catering to the 360-degree payment ecosystem in India and around the world. Over the years, we nurtured this dream while PayCraft was building its business and, finally, we began focusing on online payment cases.
PayCraft was founded in 2013 with the aim of easing urban mobility. The organisation is one of the leading solution providers for banks and operators of public transport. PayCraft, a homegrown MSME and one of the pioneers in implementing offline and contactless payments, is one of the preferred partners for the implementation of the open loop payment solution, which combines the technologies of the retail and transit/offline payment worlds to enable a multi-party digital ecosystem.
We have built three platforms — a cloud-hosted payment platform, an automated fare collection platform and a digital QR platform. Through its payments platform, PayCraft offers a range of card management solutions for the banking and payments industries.
ET: What problem is Paycraft trying to solve?
AP: PayCraft aims at enabling and easing urban mobility. With the vision of being part of a cashless India, PayCraft implemented an offline payment mode for transit ticketing and toll payments. Both these use cases have been successful because of the government’s and industry’s efforts to develop specifications and standards that promote not only the payment process but also interoperability. The National Common Mobility Card (NCMC) and the National Electronic Toll Collection (NETC) are standards and specifications that have enabled this.
Ambarish Parekh, CEO, PayCraft
Metro rail organisations have implemented offline payments in transit, initially using closed loop and proprietary solutions, and are now migrating to open loop bank cards. Other modes of public transport like buses, trams, ferries, etc, are also following suit. The total addressable market for transit payment use-cases is estimated to be around $10 billion. In toll payments on India’s national highways, adoption of offline payment using the open specification FasTag brand is almost 100%, which is currently averaging $5 billion per annum. More use cases of offline payment like parking and general retail are emerging, and soon India could be one of the world’s largest offline payment users based on demographics and need.
Paycraft incorporates the following important aspects from a technology and process perspective:
- Seamless switching between offline and online payments based on internet availability. Thus, the customer is insulated from the hassles of poor internet connectivity and, at times, availability
- System-driven risk mitigation measures to bring down risks for payment issuers and acquirers
- Use the power of smartphones and tablets for encryption, offline processing, etc, thus making the whole thing a ubiquitous proposition as smartphones are now an essential part of the day-to-day lives of citizens.
ET: What is the opportunity for such a service in a country like India?
AP: Almost 8 crore people travel daily on buses, and another 5 crore would travel in metros when the 100 metro cities’ vision of the PMO is achieved. The average ticket size for daily ridership on a bus is Rs 15, and for a metro, it would be Rs 40. This leads to a total addressable market of $10 billion in gross transaction value. This is only for metro and bus travel. However, when an offline mode of payment is implemented for low-value payments in retail, the opportunity is unlimited.
ET: Did you raise funds and how are you different from others in the space?
AP: In January 2020, Mastercard invested as a strategic partner in PayCraft. We are in talks with global investors to raise additional funds.
When it comes to difference, Paycraft focuses on catering to offline digital transactions, a segment that is niche and overlooked compared to the online payments market in India, which has seen the emergence of many players.
Our current product offerings include SaaS-based card management solutions to enable companies to issue debit and prepaid cards; acquiring solutions for handling offline and online transactions; and NFC payments and mobility card solutions, among others.
Offline payments were such a niche sector in India that Paycraft had no government specifications to rely on during its early days. The government of India and the NPCI formed a committee to work on the NCMC specifications, and we three founders of Paycraft were among those on the committee.
By that point, Paycraft had doubled down on building an entire ecosystem — a proprietary automatic fare collection system, a card issuance platform, and an acquiring and issuing side switch — for metro and bus implementations, allowing transactions on a bank-led card.
Today, Paycraft holds almost 95% market share in India in the transport sector wherever a bank-led implementation is happening, be it in a metro or bus.
ET: How can your solutions solve some of the urban transport issues?
AP: PayCraft is a payment solution provider for major metro projects in India. It has created a ticketing and payment product that will allow commuters to purchase tickets via a QR code. We are moving towards the objective of eliminating cash and bringing convenience to commuters by reducing their touchpoints before they finally travel.
The ticketing sector has been predominantly dominated by international players or by partnerships between domestic and international players. With the vision of our PM and ministries, we now stand tall alongside large international corporations on which we previously relied.
The Delhi Metro was the first one in the country to introduce ticket vending machines that had options for making payments using cash, cards and other digital channels, including UPI. Since then, digital payments have grown significantly. But the solution to bring all digital payments into one box was flawed. However, with Pune Metro’s revolutionary vision, we are bringing in the change that will put us way ahead.
ET: How can we make our future cities healthier and more liveable? Is it by promoting greater use of public transport and what are some solutions in the India context?
AP: It is no secret that the developed countries have used a disproportionately large part of the global carbon budget.
The key principle that informs India’s climate policy is pursuing the country’s development goals along low-carbon development pathways. PM Modi has repeatedly stated that India’s growth paradigm views development and climate action as complementary rather than antagonistic.
Transport is a major contributor to GDP, both directly and indirectly. India is working on low-carbon options in the context of the significant expansion needed across transportation modes for passenger and goods mobility. The country is encouraging improved fuel efficiency by promoting a phased transition to cleaner fuels, a modal shift towards public and less polluting modes of transport, electrification across multiple modes, strengthening demand-side management, traffic management and intelligent transport systems.
India’s public transport needs are expected to grow rapidly as the country urbanises. In 2020, road transport accounted for 87% of all passenger trips, 18% of total energy consumption and 11.7% of greenhouse gas emissions. The seamless experience of payments for urban transport and mobility through initiatives like NCMC will encourage the use of public transportation.
ET: How has business been for you? What are some of the noteworthy projects you are involved in?
AP: Paycraft expanded its footprint into Africa almost a year ago. Now, we will focus on expansion in the MENA region over the next two to three years. We have plans to open a new office shortly, from where we intend to run our MENA operations, with an eye on Europe and Southeast Asia.
Paycraft’s latest offering is defined as a “one nation, one corporate card” solution that is currently undergoing closed user group testing. We are aiming for a commercial launch in mid-October. Few projects that we are a part of include the Kochi Metro, Ahmedabad Smart City, Surat Smart City, Kochi City Buses, Bhubaneswar Smart City, Nagpur Metro, Noida Metro, Pune Metro and the Chennai Metro Rail Limited.
PayCraft has been growing every year. Last year, PayCraft did a business of Rs 48 crore, and it aims to grow at 45% year-on-year.
We have built common mobility card solutions and unique platforms for offline and online transactions on debit and prepaid cards, and today successfully manage 65 million cards on the card management platforms, including NCMC and Mastercard M/Chip Advance issuance and acquiring and processing over 100 million EMV offline transactions.