Nitin Gupta is the CEO and Co-founder of online payment company, PayU India. He started his career as an investment banker with Lehman brothers in their London office. He was in the fixed income division working across asset classes - ABS, Rates, FX and Commodities - both in structuring and sales. He also later setup a similar desk for them in Mumbai. Prior to setting up PayU in India, he founded an internet firm KhojGuru.com. An alumnus of IIT Delhi and IIM Ahmedabad, Nitin is passionate about building ventures from scratch and that’s what he’s said he’s doing with PayU India. 

You’ve founded KhojGuru.com and you were a part of the start-up ecosystem. What motivated you to take up PayU India profile? 

There is no difference in this profile. Start-up culture pushes you to make things happen which I have been able to replicate in PayU. So, PayU in India has been built up from scratch we haven’t taken anything from anywhere. I was the second guy to join the team in June last year apart from the Chief Operating Officer (COO) Shailaz Nag. So, both of us built it up from scratch ground up and now the company is 100 people plus strong. The entire culture that we have brought into PayU is of a start-up. 

PayU has presence in 16 countries now but why did it choose 2011 to foray in Indian market? Do you think earlier the market was not ready? 

The parent company of PayU is Naspers which decided to enter India at that point of time. Secondly, we also decided to venture in payment field at that point of time. So, payment is a huge focus for Naspers they had single point focus in 2011 to extend their payment access in others parts of world which were doing well, hence they ventured in India in 2011. Incidentally, I was coming out of KhojGuru and was looking to set-up something from scratch. Naspers wanted to do three-four things one of which was payments I believe that the next billion dollar company, which happens in India, would be in world of payments. So, I have started working on PayU. 

Since 2011, how has the company grown in terms of number of clients? If you can share numbers. 

PayU presently has 1800 merchants since its launch in October 2011 it is a good figure to achieve in 15 months. We are fairly confident that now we are the number one processor in the ecommerce category among all aggregators. So, the daily EMV that we do is the highest among all aggregators only in the ecommerce category. We are the number three player in terms of daily value of the transactions processed among all categories which includes utilities as well.

Choosing payment gateways is a huge problem for start-ups? What questions do they ask while taking you on board? 

The range of questions is actually quite large. It also depends whether they understand how a payment gateway works otherwise the standard question is how do a payment gateway works? 

How will it be integrated with the ecommerce website, how transaction will get processed when will I get the payment. What are the charges going to be and how quickly can I get the payment gateway. What will be the conversion rate of the gateway. If the transaction does not succeed what it means why it did not succeed and how will the refund work. 

So, basically while choosing a payment gateway whether by a big company or a start-up there are three things that matter. First, is the product which means conversion rate of payment gateway, the number of payment options offered, features like Store my card details, in page check out, IVR etc. 

Second is the quality of the customer service all the ecommerce merchants promise an excellent service to the end customer so they want equally competent and fast service from respective payment gateway. PayU scores high on these two parameters. 

Third is competent pricing. 

You have competitors like BillDesk, BillJunction and CCAvenue. How do you plan to counter them? 

Our strategy is to focus on product so we have an eminent team of 35 engineers and more than half of the team comes from premier engineering colleges like IIT, Delhi College of Engineering (DCE) etc. So, these people are continuously working on really cutting edge technology features. We are working to innovate our product and that is why our conversion rate is 12 per cent better than any of the competitors.

Second thing we work upon is customer service we are finicky about it. We have dedicated account managers who are always there to answer customer’s queries. 

How is the upatke of PayU among traditional merchants? Is there a positive growth in the number approaching you? 

As ecommerce is growing we are witnessing a change in attitude of brick and mortar companies who now want to sell online. Therefore, the number of queries from traditional merchants is increasing very rapidly. Presently, we are on boarding about 200 merchants a month about 75 per cent of these are products and out of these there is a fair chunk of brick and mortar are thinking of setting up a store online. These are not only large brands in fact there are small shops from across the country that want to come online and sell. 

RBI has ruled that all payments made to Indian Business Accounts via Paypal should be brought into banks in India. Is there a similar guideline for PayU as well?

We are governed by the Payments Act 2007 of RBI so there are certain regulations that apply to us which are quite stringent. We give money to merchant within two working days as mandated by RBI that money also comes through a nodal bank account. So, the money that we get from different banking partners goes into a nodal bank account then from there it goes into a merchant bank account. So, the merchant’s money is always safe. Apart from RBI, we also follow what VISA and Master Card tells us, we also follow what the acquiring bank tells us. 

Also, do you think that RBI guidelines are too stringent for foreign players to operate smoothly in India? 

Payment is anyways a highly regulated subject across globe. I believe RBI does a good job of it and any players who are entering in this space in India irrespective of them being domestic or international they have to abide by those regulations. So, payment related players who want to set up local operations in a particular country have to abide by their rules and regulations. 

Export-related payments for goods and services into PayPal account have been restricted to US$ 3000 per transaction, any such restrictions for PayU subscribers? 

The issue with PayPal is that it receives the money in a wallet if the money goes straight in a bank account the issue would not exist. So, we offer dollar gateway to our merchants who process dollar transactions from international customers there is no such restriction because all the money they get goes into their bank account. RBI basically wants clear tracking of money which goes away in case of a wallet. 

As per Nielsen Report, 77% online Indian customers still prefer physical transactions. Do you see this trend changing and people adopting online payment services? Where do you see the company’s position after three years? 

In US, people use VISA and Master Card to make transactions if anything goes wrong the customer just need to make a phone call to the bank and tell them the transaction is disputed and get their money back. The issue could be a fraud or anything else.  In India, however, people have a variety of payment methods and they don’t whom to catch if something goes wrong. They don’t realize the ability to being able to raise a dispute and get their money back. That is in general the knowledge of the Indian consumer and also the processes for the dispute resolution offered by different banks. So, the core problem is trust so when we can get the consumer trust that if something goes wrong they will get their money back very easily without any hassle then we will be able to see lot many people adopting online payment methods. 

PayU will soon be launching certain initiatives where we are going to offer such a trustable service wherein if some issue comes up we will be handling it completely for the customer. So, if one player does this sincerely the entire ecosystem will start doing it then the trust in online payment ecosystem will eventually increase. We expect this trend to change so that more and more customer will pay online because Cash on Delivery (COD) is fairly expensive. 

You have recently launched IVR facility for customers paying through phones. Do you think it is going to pick-up in India as only 3.6 per cent of online transactions volume comes from mobile phones. 

IVR is a hygiene factor which means that there are certain merchants who primarily operate on phones for them IVR is very crucial. But in general it is not a good alternative to online transaction because the One Time Password (OTP) is not a great user experience as every time you want to make an online payment you have to generate OTP each time.

If we look at mobile at a larger level, we have witnessed that more and more transactions are originating from mobiles as more people are using mobile internet. So, if last year one per cent of transactions were originating from mobile the number has increased to 3.5 we expect it to increase upto 14 percent. 

You have said that PayU targets to achieve $50-70 million revenue in the next three years. How feasible is this target? 

We will make it happen! 

Share with us your plans for 2013? 

By 2013, we should be having 10,000 plus merchants very easily. We are working very actively in several categories. We are already the number one player in the ecommerce category and we are looking to expand in other categories as well.