The emerging winners of India’s Demonetization drive: 5 exciting Fintech Startups you should look out for

Published on Nov 22, 2017

Until November 8, 2016, Demonetization was not even a word know to the common man until Prime Minister Modi addressed. From November 8 midnight, Rupees 500 and 1000 ceased to be legal tender. Since then demonetization has become one of the most searched keywords on Google. The announcement’s Wikipedia page has received more than 300,000 views till date. There have been mixed views since the announcement. Most agree that the decision is good for the economy. As of this writing, there is no clarity as to whether demonetization will be a success or not. However, there is one clear winner in the wake of the current demonetization drive. Fintech Startups!, enabling digital payments.

 As per a 2016 BCG-Google study, near 78% of all consumer payments in India were made in cash. This is more a cultural habit than anything else. Thanks to the initiatives by the government and funding from VCs, all this is set to change. It is estimated that by 2025 nearly 60% of all transactions would be non-cash. Of this, digital payments alone would contribute to 37% of all transactions. No wonder, nearly 50% of all fintech startups are focused on payments and trade processing. I have handpicked 5 exciting digital payments startups purely based on the trending news in social media and relevancy of them in solving the existing problems through FINTECH STARTUPS

1. RazorPay

India’s answer to Stripe. This startup focuses on bringing small businesses in India to sell online. For that, it provides a simple interface, a gateway and a quick onboarding process. Currently, the on-boarding process for a payment gateway is highly complex. Low card penetration, strict regulations, the lengthy documentation makes it difficult for small businesses to get online. With an easy to use API and an online verification process, business users can start selling goods online in no time. RazorPay was started by two IIT-Roorkee alumni, Harshil Mathur and Shashank Kumar. With 11.6-million-dollars funding and an undisclosed amount from MasterCard, RazorPay aims to be a leader in frictionless transactions for merchants, schools, e-commerce and other companies to accept payments online.


2. Chillr

This startup’s mobile app allows users to send money from their bank accounts to anyone in their contact list even without knowing their account numbers. It also supports utility and bill payments. HDFC Bank, Bank of Baroda, Federal Bank are among its customers. In October 2015, the startup raised 7 million dollars funding from Sequoia Capital, Blume Ventures, and others. Incidentally Sequoia Capital had invested in MobiKwik and HDFC has a payment app called PayZapp. What makes Chillr unique is that it eliminates the need for entering bank or card details repeatedly. Chillr was founded in 2014 by Sony Joy, an alumnus of College of Engineering, Trivandrum. 


3. ToneTag

This startup aims to disrupt contactless payment using sound and radio waves. It does not even require NFC. The company claims that their technology works even in noisy environments. It has raised more than 1 million dollars from Reliance Capital in 2015. In late 2016, the company raised another undisclosed amount. ToneTag is collaborating with Mphasis, where the latter will help build banking solutions and be an integration partner in ToneTag’s services. Investors include Arun Seth, TV Mohandas Pai, Anand Chandrasekaran, TK Kurien and Deepak Ghaisas. 


4. Simpl

Started by two women entrepreneurs, Simpl lets users pay for all purchases in one go on the 1st and 16th of every month. With a single tap, shopping on the various website becomes a simple affair. Multiple verifications, OTPs, wallet balances are not required. Founders Chaitra Chidanand is a Stanford graduate and Nitya Sharma is a University of Michigan alumnus.


5. PhonePe

PhonePe is a UPI (Unified Payment Interface) based payments app. Once the bank account is linked to the app, all payments can be made. The startup has gained attention since Flipkart acquired it in April this year. Since acquiring Flipkart has announced that it will invest over $100 million in PhonePe. All its existing wallet customers Flipkart Money and Myntra’s wallet will now be branded under PhonePe. In its competition with Amazon, its move to acquire PhonePe is a big bet on payments. PhonePe’s founders Sameer Nigam and Rahul Chari are ex-Flipkart employees.


Though this list is meant to have 5 names, we could not ignore NPCI (National Payments Corporation of India). Set up in 2008 as a not-for-profit company by Reserve Bank of India and Indian Bank’s association, NPCI is the little-known startup from Mumbai that has been revolutionizing the payments system in India.

Many factors contribute to the increased interest levels in Fintech. Government policies, Venture Capital, Mobile Phone penetration, Technology infrastructure and Talent availability are some of the leading factors. Government initiatives such as Demonetization, Unified Payments Interface (UPI), Bharat Bill Payment System (BBPS) have only attracted more players and investors.

It would be interesting to see what role front runners play such as Apple Pay, Samsung Pay, Android Pay, PayPal will play in 2017. One thing is clear, few Fintech startups are disrupting and most are supporting the existing models. The customer base will only expand, pushing existing players to move quickly or allowing new players to enter.