Pine Labs Aims at Up to $5 Billion in Monthly Payments From Plural Business

India’s Pine Labs is targeting $4 billion (roughly Rs. 31,685 crore) to $5 billion (roughly Rs. 39,600 crore) in monthly transactions within two years for its new online payments business, its chief executive told Reuters.

At that point, online payments should contribute 20 percent of revenue, Pine Labs chief executive Amrish Rau said, disclosing the company’s targets for the first time since it entered online payments.

Valued at $5 billion and with investors including Mastercard and Singapore’s Temasek, Pine Labs has for years provided point-of-sale machines to offline merchants for card payments.

Last year, it launched Plural, a service to process online transactions in the country’s booming payments market.

Rau said Plural was currently processing $380 million (roughly Rs. 3,011 crore) in transactions monthly, but that would grow 10 to 15 times in the next two years. The monthly transaction value would be $4 billion to $5 billion, he also said.

In the first 10 months, Plural had bagged the online transaction processing business of new clients including Samsung India and Apple’s Indian resellers, Rau added.

“Offline payments (business) is much more difficult than online and we have already cracked that. Merchants expect high transaction success rate from online payments. We can give any competitor a run for their money,” he said.

Digital transactions make up 40 percent of all transactions in India’s fast-growing payment space, according to Boston Consulting Group. A government push for people to pay digitally is helping to drive the rise of digital transactions.

Indians made card payments worth $22.6 billion (roughly Rs. 1,79,119 crore) in May 2022, nearly twice as much as a year earlier, according to central bank data.

Pine competes directly with other payment gateways such as Sequoia-backed Razorpay, which is valued at $7 billion (roughly Rs. 55,494 crore), and Prosus-owned PayU.

For Pine Labs, competition will remain stiff, as rivals offer similar services and are already well established.

“Everyone provides the same service, so differentiation is very hard in the long run,” said an executive at a rival payments firm who declined to be named due to business sensitivities.

Pine Labs is trying to lure customers by offering a processing fee 10 to 12 basis points lower than some rivals’, according to an industry source with direct knowledge.

The company is currently clocking around $200 million (roughly Rs. 1.585 crore) in annual revenue, the source added.

Rau did not comment on his fee structures or revenue.

The company will evaluate a stock market listing in coming years, after raising more than $1 billion (roughly Rs. 7,927 crore) from investors in the past 15 months.

“Markets are still trying to find its feet in terms of high interest (rates and) inflation. So, on the question of IPO, we can probably evaluate later,” he said.

© Thomson Reuters 2022