Deep Technology Capability helps Innoviti Increase Gross Margins Even as MDR Reduces
6 February 2020
Gross Margin Surges to 74%; Capital Efficiency touches Rs.300 GTV per 1 Re of Equity Raised
- Leading payments player, Innoviti Payment Solutions shared insights into how its longstanding focus using technology to create value from digital payment flows has now received a welcome boost from the newly announced regulatory move towards a Zero MDR regime. In a vindication of the company’s strategic bet, the steady regulatory trend over last 2 years of first reducing and now removing merchant MDRs, has helped drive a surge in transaction throughput per point of acceptance to 5 Lac/month, more than 2X of India’s average (as per RBI data). This trend is also reflected in a corresponding strong uptick in Innoviti gross margin to more than 74%, basis which the company now expects to be EBITDA positive by March 2020.
- At the core of Innoviti’s strategy has been its relentless focus on capital efficiency which prioritized transaction volume processed per POS terminal over metrics like the total number of POS terminals or dependence on merchant MDR revenue streams. Innoviti manages almost Rs.300/- of GTV for every 1 Rupee of equity raised. This is more than 3X the payment industry norm (typically between Rs.10-Rs100 amongst other leading industry players). With more than Rs. 40,000 Cr. of digital payments flowing through Innoviti (~6% of India’s offline payment volume) from over 1000+ cities, Innoviti is a clear leader in capital efficiency at scale.
- Innoviti’s industry-leading capital efficiency is underpinned by a technology-driven product strategy that veered away from conventional industry focus on dividing pre-existing merchant MDR revenue pools; and instead prioritized generating of new value-added revenue streams from helping offline merchants leverage their payments channels as a strategic tool for driving store sales growth. Innoviti’s payment platform today enables merchants to tap a wealth of payment transaction-related data that can potentially influence what and where a customer buys and how he pays for it. This innovative strategy opens the path for mutually beneficial win-win sales promotion partnerships to be operationalized between merchants, payment providers like Credit/Debit Card issuers, UPI Payment apps etc, and various product merchandise brands. This alignment of goals across the 3 key parties involved in every offline retail purchase enables pooling of marketing budgets for a common objective, resulting in lowering marketing costs and increasing sales efficiency for all 3 players.
- From the end consumer perspective too, Innoviti’s product strategy holds significant long-term benefits. The technology-driven collaboration enabled by Innoviti’s platform means that supply-side players can now plan and deliver highly targeted sales promotional offers to end-consumers with fully auditable controls. With the advanced rule-engines on Innoviti’s platform enabling complex promotions to be configured in seconds and applied across thousands of pan-India terminals in real time, consumers will inevitably gain in terms of the value and relevance of such targeted promotional offers.
- As a testament to Innoviti’s payment technology prowess, the company currently has 17 patents filed for, 6 of them internationally. It has already been awarded 2 patents making it the only company in India payments industry to have awarded patents.
- Innoviti’s plans this year include using technology to once again disrupt the market through a) industry focused products across healthcare, apparel, food & grocery, restaurant and consumer durable and mobile segments, and b) deliver and service these products through innovative distribution models that will allow for rapid profitable growth. Innoviti looks to increase its GTV per Re raised to Rs. 500 this year, in this road to becoming cash positive within the next 12 months.
- Innoviti is backed by marquee investors including Bessemer Venture Partners, USA, SBI Venture Capital, Singapore and Catamaran, India.
Mr. Rajeev Agrawal, Chief Executive Officer, Innoviti Payment Solutions Ltd.:
“At Innoviti, we have long believed that we offer value to our merchant customers that goes well beyond simply providing a smooth and efficient processing pipeline for their payment acceptance. As such, our business strategy has never been over reliant on revenue streams from dividing existing merchant-paid MDR pools. Our consistently industry-leading capital efficiency ratios are testament to that strategic bet. The recent regulatory trend towards further encouraging digital acceptance spread and volumes by removing merchant MDR on UPI/RuPay transactions, further vindicates our stance.”
About Innoviti Payment Solutions Pvt. Ltd., Bangalore, India.
Innoviti Payment Solutions runs a payment platform that has a unique ability to add intelligence to traditional payment channels, enhancing their value. Merchants, brands and financial service providers use these intelligent payment channels to reduce cost and drive sales of their products. Innoviti processes over Rs. 40,000 Cr. of payment transactions, about 6% of all offline merchant payment transactions in India. This also includes Rs. 1.500 Cr. of transactions involving distribution of loans to consumers and small businesses. The most capital efficient company in this space, Innoviti processes more volume for every $ raised than any other payments company. The company is backed by marquee investors such as Catamaran Ventures, SBI Venture Capital and Bessemer Venture Partners.
For more information, please visit – https://innoviti.com/
Sarath Chandra Nerella
Associate Vice President – Marketing Communications
Innoviti Payment Solutions Pvt. Ltd.