Refer Thread 149 above for Aqcquiring policy
Answer is RBI to my limited understanding but notification came from NPCI
perfect, so this means that these events are not in control of the company or bank, controlled by regulatory.
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Below are my observations
a. NPST was earlier using only one Co-operative bank which was Cosmos Bank as Sponsor bank
b. As per NPST they got instructions from regulator to add more sponsor banks to remove the dependency from single bank
c. Addition of the new sponsor banks took longer time than expected which affected the Payment Platform as a Service business segment which generates 80% of the revenue
d. Now as the 2 sponsor banks have been added they will be able to provide the choice to new co-operative banks to use as a Sponsor and they will be able to onboard new banks without any hurdle
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dont think regulator can ask a 3rd party to add more sponsor banks. This they would have done as a derisking move after seeing the fiasco at Cosmos Bank. The delay most likely happened due to regulator asking for changes ( which would have been also formalised after multiple iterations ) and then getting these done on the payments platform.
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Wonât there be significant effort, expenditure and rebuilding goodwill in the marketplace to ramp up the payment platform again? Since we disrupted our services to our clients, and we might as well have been blacklisted by some of them for not upholding service agreements
From what I understand about the payments platform, it probably has clients each contributing revenue in large chunks (rather than granular among many small clients) So if one large client denies entertaining our comeback offering now then revenue growth from PP may be slow.
that view has been accepted by management and the view now is that apart from payments platform, they have launched more products and services, infact they advanced the development and launch of some which were slated to be launched 12 months later, so management has been proactive and also accepted the mess.
This is the biggest risk I see as of now. Bank usually have multiple vendors and they might be assistants to give the entire volume back to NPST. I donât think it would go to blacklisting but it will delay the time required for scaling to previous levels.
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Payment platform business from what I have understood does not caters to banks but to mostly payment aggregators and volume merchants who want to themselves integrate UPI on their website/app instead of using PG. Someone correct me if I am wrong.
I will try to summarize the issue (let me know if I understand it correctly):
What went wrong?
- NPSTâs Payment Platform as a Service (PPaaS) business had one cooperative bank as a sponsor bank.
- At the end of Q2 FY25, this bank changed its policies, requiring a re-evaluation of its acquiring model (merchant onboarding & transaction processing).
- This led to a halt in new merchant onboarding, reducing NPSTâs revenue from this vertical in Q3 FY25.
Transcript Reference:
âOur primary source was a bank from the cooperative segment. It was during the end of Q2 when the bank policies changed and the acquiring policy was to be relooked for the cooperative banks.â
Measures taken by NPST:
- Two new sponsor banks were added in Q3, one in the production testing phase and another in pre-production.
- Goal is to add 10 banks instead of relying on just 2-3 banks.
Transcript Reference:
âWe added two sponsor banks, not just one. Looking at the last quarter, as soon as we realized how quickly weâll have to get into this decision meticulously, we fast-tracked it. The vision is to add 10 banks.â
Now, this may have been a genuine oversight by the management, where they failed to anticipate this bottleneck. However, adding more sponsor banks will ultimately make their business operations more robust and future-ready.
From the customersâ perspective, though, this could have been an extremely frustrating experience. Businesses relying solely on NPSTâs platform, without a backup, may have suffered serious financial losses.
Only time will tell whether NPST can fully recover its revenues and how significantly its credibility will be impacted in the market.
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I guess market got the explanation in last call.
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does anyone know which banks have they tied up with?
Finally they are listing on main board
Stock already up 50% post the announcement!!
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NSDL Payments Bank & SBM bank
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previous quarter they first time declared dividend and in this quarter they are raising money. why ?
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Please check the latest concall transcript
Answer by Management on Fund Raising
Like I said earlier, one critical reason why we really wanted was to get an institutional backing
and someone who would really understand our story and bring a lot of guidance to this
organization. So, more than money, it was also about the kind of association and the kind of
strength this organization can get with such kind of guidance. So, thatâs something. But when it
comes to money, what we have done is, we have a very structured and thought through process
around the growth. So, one is, we want to ensure that our growth path around inorganic
structuring of the business is rightly achieved. So, one-product, second-service, third business.
Irrespective of the domain that we are operating, like it can be PayPass, it can be TSP, it can be
acceptance ecosystem, it can be global opportunity, wherever possible. Now, the organization is
empowered beyond organic, it can now take an inorganic leap. So, thatâs one. And then the new
area of interest, like what we further try to see that what more can we do for the expansion. So,
we build APIs and then we give web solutions, we give app solutions. But the acceptance of
payment beyond this is also through devices. And we believe thereâs a huge gap. And thatâs why
we have a literally plan around payment infrastructure development fund by the government.
So, thatâs the area that we really wanted to target. Because it not only has the domestic demand,
it has the global demand. And it is agnostic to the domestic design of payments. So, now that is
a specific vertical where we see a lot of opportunity. Third, beyond inorganic and acceptance is
our lot of focus around the building lending-based platform. Now, here is what we want to do.
The opportunity that comes around the gap in credit card domain. I mean, if you take global and
if you take Indian market and the gap you see with the number of card issued, the number of
credit line available around MSME, SME or the business segment. The number of credit lines
available in the P2P segment, now thatâs tremendously big. Going forward, it is only going to
multiply. And having a platform around that will be a great opportunity for us. So, these are 3
to 4 areas where we feel there will be a right utilization of us.
Nitin Gupta: Thank you for the opportunity. Deepak, I was listening to your points earlier in this call. My first
question is with respect to the fundraise that you have done, I understand that you indicated a lot
of things in which you will be working on for which this fundraise may be required. So, is this
like itâs only for the external or the incremental manpower that we will be putting in, we require
this or itâs like for purchase of some hardware or something? Because I donât think itâs reallyâ
Deepak Chand Thakur: It varies, Nitin. So, for example, if it is acceptance ecosystem, wherein there is an OPEX based
revenue over the period of, letâs say, three years committed over the device as a service model,
then in that case, if at all there is a need to pick up a larger order, and then the pace of delivery
is way too fast, the demand has come really fast, then in that case, if at all required, then we can
think about utilizing this fund for the hardware piece. And that for us will be hardware. But when
it comes to building a very strong domain around lending, then it will be a combination of the
platform, people, process, everything taken together. When it comes to going forward and
executing the hosted solution, and we feel that there is an opportunity to acquire a business, and
that is the customer, then that is an opportunity for us. So, I say thatâs why Nitin, it varies with
the kind of opportunity we see forward. Because see, as our DNA, we have built payments stack,
right? If you want to scale it to lending, if the journey can be brought down from 24 months to
6 months, now thatâs the opportunity that we want to capture. So, in that case, it can be people,
process, everything taken together, platform, all these.
Disc : Invested for more than a year
Need to be careful on NPST. Situation on ground has changed RMG ban burns a huge hole in ePay firmsâ balance sheets - The Economic Times
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