A Mumbai-based startup called ftcash is helping small businesses in India move beyond cash. In some cases, it’s also providing loans to fund their operations.
Co-founder Vaibhav Lodha, who demonstrated ftcash on-stage today at TechCrunch’s Startup Battlefield, said he first got the idea from his newspaper vendor, who complained that none of his customers seemed to have the cash at home to pay him. The issue was serious enough to create a cashflow problem for the vendor, prompting him to consider going to a loan shark.
So ftcash allows any merchant with a feature phone and a bank account to accept a variety of cashless payments — including credit cards, debit cards, mobile wallets and PayPal — after just a few minutes of setup.
Lodha said he reaches these merchants by hiring a small team in each market, and then looking for channel partners and other businesses that he can work with to increase distribution.
There are already 25,000 merchants signed up, and the company has been growing 30 percent month-over-month for the past 18 months. Most of these merchants don’t have any point-of-sale hardware beforehand, so after they sign up with ftcash, the startup ends up processing between 10 and 50 percent of their purchases.
Lodha also pointed to India’s recent move to abolish certain rupee notes as a sign that there’s a broader shift away from cash (even if the effects of the policy are still being debated).
And as already mentioned, ftcash isn’t just providing payments technology. Lodha said that these merchants often have trouble getting loans from banks because limited financial records make it difficult for lenders to create “a credible risk model.”
But thanks to the payments data that ftcash is already collecting, Lodha said his team can make the loans safely and intelligently. The data also allows the company to see when a borrower might be struggling financially, so “if a merchant is going south, we can be the first in line to get our money back.”
To be clear, Lodha’s startup isn’t actually providing the capital for these loans — that comes from an undisclosed financial partner. From the merchant’s perspective, however, its relationship is entirely with ftcash. The loans usually range from $1,000 to $20,000, with interest rates between 18 and 30 percent. Lodha acknowledged that those rates might seem high, but he said that compared to loan sharks who charge between 50 and 300 percent, “It’s a really cheap loan.”
Lodha is also starting to think about expanding internationally and is looking at Southeast Asia, the Middle East and Latin America as possibilities. In keeping with the company’s growth strategy, he’s interested in selling the technology to international partners who might want to offer it under their own branding.
The company is currently participating in the MasterCard Start Path program. It’s backed by PayPal, IvyCap Ventures and others.
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