Indian Digital Payments - Aurum Equity Partners LLP2. Indian Payment Landscape 10 3. Automated...

February 2015

Indian Digital Payments

At an ‘Inflection Point’ for a high-growth phase

Strictly Confidential

• This note on ‘Indian Digital Payments’ is presented solely for the internal use of the recipient to whom it is marked by Aurum Equity Partners LLP (‘Aurum’) and does not carry any right of publication or disclosure to any other party.

• In preparing this note Aurum has relied upon and assumed, without independent verification, the accuracy and completeness of all information available from published and public sources. Accordingly, neither Aurum nor any of its affiliates, shareholders, directors, employees, agents or advisors make any representation as to the accuracy, completeness, reasonableness or sufficiency of any of the information contained in the note, and neither of them shall be liable for any loss or damage (direct or indirect) suffered as a result of reliance upon any statements contained in, or any omission from this note and any such liability is expressly disclaimed.

• Aurum has developed this note on its own behalf and without prejudice. This note should not be construed as an offer to sell any securities in or assets of any of the companies referred to in this document, or an invitation to offer.

• © 2015 Aurum Equity Partners LLP. All rights reserved. In this document, “Aurum” refers to Aurum Equity Partners LLP, (a limited liability partnership firm).

Disclaimer

2


Dear Reader,

This report is our attempt to provide an overview of the digital payments landscape in India and Aurum’s views on where the sector is headed in the medium term. Digital payments is expected to be one of the biggest beneficiaries of the ‘Digital Revolution’ currently being witnessed. Increasing banking reach, larger accessibility to broadband, more smartphones and enabling network infrastructure are all expected to drive ‘Electronization’ of payment systems. Despite all its potential, several questions remain unanswered about how things will unfold in medium term. Will the RBI be able to balance consumer well-being with profitable business models for companies? Will the niche promising companies be able to scale up profitably and achieve sustainable transaction volumes? Will the main enabler ‘internet story’ pan out as expected? We have tried to collate maximum possible secondary data from disparate sources and brainstormed to arrive at possible future trends in every segment. These trends were then discussed with our pool of industry experts and validated. As we continue to learn and improve, we would welcome feedback from every reader about how we can do better. Please write to us with your feedback on the report. Aurum Equity Partners LLP

Foreword

3


About the Authors

Anshul Gupta Lead & Executive Team Member Internet Related Business Aurum Equity Partners LLP [email protected]

Sanjay Bansal Founder and Managing Partner Aurum Equity Partners LLP [email protected]


Contents

5

Section Page No.

1. Executive Summary 6

2. Indian Payment Landscape 10

3. Automated Teller Machines (ATM) 18

4. Point of Sales (PoS) 25

5. Cards 32

− Debit Cards 33

− Credit Cards 36

− Prepaid Cards 39

6. Electronic Payments Market 45

− Large Value Settlements & Online Payment Gateways 46

− Mobile Wallet 51

7. Payment Banks: Aurum View 56

8. Past Transactions 59

Strictly Confidential 6

1 SECTION Executive Summary


Executive Summary (1/2)

• ‘Payment System’ is the backbone of country’s economy with transactions across paper, online, mobile etc.

• Payment ecosystem in India is evolving rapidly on the back of ‘digital revolution’ currently being witnessed. Government’s increased focus on reduction of paper transactions is also resulting in change in spending habits

Government Initiatives

• Government’s initiative ‘Jan Dhana Yojana’ was focused on financial inclusion and opened 115 million bank accounts covering 99.74% of the un-banked population

• Recent scheme on ‘Direct Benefit Transfers’ on cooking gas involves 25 million households and is the largest Direct Benefit Scheme in the world

Digital Revolution

• Aurum believes Digital Payments will be one of the major enablers if India has to go the ‘digital way’

• India boasts of the third largest Internet user base globally, estimated at 213 million in 2013 and expected to reach 564 million by 2020

• E-tailing market, estimated at US$ 13 billion in 2013, is expected to reach US$ 60 billion by 2020

Favorable Demographics and Enabling Infrastructure

59% of India’s population is under 39 years of age, resulting in higher discretionary spend (CAGR 2011-16E: 16%)

Over 900 million mobile users and improving network connectivity present a potential high growth story


Executive Summary (2/2)

• Aurum has relied on publically available information from RBI and National Payments Corporation of India (NPCI) for factual data in this presentation. Aurum views are based on our interaction with payment companies and our analysis of the space

• Major themes in sub-segments:

— ATMs:

o One of the biggest beneficiaries of financial inclusion theme and opening of bank accounts for the un-banked

o Banks largely outsourcing ATM activities. Efficiently run companies to build successful business models and attract capital

— POS

o Moderate growth in conventional POS to continue

o M-PoS better suited for smaller merchants and will continue to gain more traction

— Cards

o Robust growth in debit cards to continue, with more people coming under formal banking system

o Increasing transaction values across different cards to drive other segments (ATMs, PoS, Payment Gateways)

o Adoption of prepaid cards by govt. for benefits transfers will be a key determinant for prepaid segment

— Electronic

o Online payment gateways to experience non-linear growth on the back of behavioral shift towards online

o Mobile Wallet segment is still in nascent stages. Aurum believes 2-3 players will dominate the market in the medium term

— Cash Management

o Remittances market dominated by banks and post offices, with their enormous reach. Payment Banks is the new model to watch out for


Experts Speak

“We, at Smart Data, believe that the digitization of payments for the masses is a function of two factors. (1)

Necessity, which will be driven by government regulations. On an as-is basis, this factor is not that powerful

and government needs to take concrete steps to reduce cash transactions and (2) Convenience: Payment

Companies will come up with disruptive innovations to ensure ease of transacting. This ease will become

the driving factor for the general public to move away from cash to electronic. New technologies like NFC

and easy recharge points may become the driver for this change.”

Sandeep Jain CEO, Smart Data Processing Services

“Thanks to the progressive policy interventions of the Government of India & the RBI, the pioneering

efforts of various banks & financial institutions, the Indian payments eco system is set for an explosive

growth. More and more people are now coming under the net of financial inclusion and digital payments

ecosystem. ATMs stand at the very beginning of a typical consumer evolution into the adoption of

advanced payment services. White Label ATM (WLA) players provide the critical last mile in this chain by

deploying ATMs in smaller towns and villages. At BTI, we have deployed over 85% of our ATMs in towns

below tier 3 where we see a significant business opportunity. While we aggressively ramp up deployment

of White Label ATMs in these towns/villages, we would have supported the larger pillar of financial

inclusion in a significant manner.”

K Srinivas CEO, BTI Payments


2 SECTION Indian Payment Landscape


Indian Payment Landscape

11

Modes of Payment

ATMs

1

POS Terminals

2

Electronic Payments

4

Cash Management

5

Cards

3

Number of ATM’s in India has witnessed a strong growth (CAGR of ~30% in the 2009-14 period) and stood at 173,697 in Oct, 2014

Ease of regulations by RBI, introduction of newer business models, reducing technology cost and surge in transactions driving ATM growth

Number of POS terminals in India stood at 1,111,576 in Oct, 2014 and is expected to grow on the back of low cost M-POS terminals

Number of transactions per POS terminal in India stands low at ~1,384 per annum

442 million debit cards in circulation with the annual transaction value at US$ 408 billion. SBI is the market leader commanding a 29% market share

20 million credit cards in circulation with the annual transaction value at US$ 29 billion. HDFC is the market leader in this segment with 28% share

ECS/NEFT/RTGS payments have been witnessing significant growth Share of paper-based instruments in the volume of total non-cash

transactions declined to 34% in 2014 Total e-commerce market in India is estimated at US$ 13 billion with online

travel and e-retailing being the key contributors for this segment growth

Domestic remittance market estimated at US$ 20 billion. Of this only 40% is accounted by post offices, banks and business correspondents

India was the largest inward cross-border remittance market having received US$ 70 billion


Market Segments and Major Players

12

Payment Services

Cash Management Electronic Cards POS Terminals ATMs

Equipment Manufacturers: NCR, Diebold, Wincor Nixdorf

ATM Management: Prizm, Tata Payments, AGS Transact, EPS, Euronet, FSS, BTI Payments

Second Level Outsourcing: CMS, Transaction Solutions

POS Owners: Banks

Equipment Manufacturers: Verifone

POS Management: Prizm, Atos, FSS, Transaction Solutions, Pine Labs, Smart Data

Mobile POS: Ezetap, M Swipe

Credit/Debit Management: Banks, In-Solutions Global, Euronet, Tata Payments

Prepaid Cards: Itz Cash, Inde Pay, Beam Money

Loyalty: Loylty Rewardz, Accentiv India, MintM Loyalty, TLC Group

Payment Gateway/ Aggregators: Billdesk, CC Avenues, Citrus, FSS

Mobile Wallet: Paytm, Oxigen, ZipCash, Airtel Money, PayMate, M Pesa

Core Banking Solutions: Tata Payment, Sarvatra Tech, FSS

Networks: Visa, MasterCard

Remittances: Itz Cash, Euronet, Beam Money, Oxigen

Cross Border Remittances: Times of Money, Western Union, Euronet

Bill Payment: Easy Bill, Transaction Solutions, Smart Data, Itz Cash


Electronic Payment Systems in India

13

Large Value Clearing and Settlement Systems

Retail Electronic Payment Systems

Payment Systems

Customer Remittance

Total Inter-Bank Remittance

CCIL Operated Systems

Value(FY2014): US$ 13,042 billion



ECS NEFT Cards

ECS (Credit): US$ 43 billion

ECS (Debit): US$ 25 billion


PoS Credit Cards Value(FY2014): US$ 29 billion

PoS Debit Cards: US$ 17 billion

67% 65% 59%

33% 35% 41%

0%

20%

40%

60%

80%

2009 2010 2011

Paper Non Paper

Paper dominates the transaction volume

16% 12% 10%

84% 88% 90%

0%

20%

40%

60%

80%

100%

2009 2010 2011

Paper Non Paper

In value terms, transactions have largely been electronic

Payment systems dominated by large value clearing and settlement systems

Aggregate value of cheque transactions (CTS and MICR) in FY14 was at US$ 1,366 billion and has observed shrinkage of ~5% annually over last 5 years

Source: RBI, Market Research


Consumption Driving Digitization

14


6%

12% 12%

4%

12%

10% 10%

14%

16%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

FY2000-05 FY2005-10 FY2011-16

Total Consumer Spend (CAGR) Essential Consumer Spend (CAGR) Discretionary Consumer Spend (CAGR)

Discretionary spending to grow at 16% annually in 2011-16 period

1,039.3

68.5 22.8 11.4 0

200

400

600

800

1,000

1,200

Paper Electronic PoSTransactions

Others

(US$

bn

, FY

12

)

Paper is still the preferred mode of payment (FY 2012) Payments in India largely consists of high value B2B transactions, which are mostly routed through electronic systems. This is the reason for the significant contribution of electronic payments in terms of value

Consumer transactions are still dominated by cash (~91% of the total transaction value in FY12)

Government is taking active steps to digitize the consumer spending and minimize the flow of hard currency


Government Initiatives to Reduce Cash Usage

15


Key Advantages of Non Cash Transactions

The high cost of paper payments ( limited life and high transaction costs of cash) and better regulatory oversight in non paper transactions makes e-payments more favourable

Cashless transactions also addresses certain key issues for India:

— Large unbanked population

— Unregulated cash economy

— Need for financial transparency

Realizing these advantages, Indian regulators are proactively setting policies to ensure growth in e-payments

Evolution of E-Payments

Early 2000 Present State Going Forward

Computerization and networking of the Indian

Financial Sector

Creation of e-payment infrastructure in India, and steps taken to create a shift towards

e- payments

New initiatives to manage e- payments, increase in security

and enhance offerings

Migration from branch level computerization to core banking solutions

INFINET, hybrid network of VSAT’s and leased lines – set up by RBI through IDRBT

Electronic Clearing Service (ECS) Electronic Funds Transfer and

Real Time Gross settlement, National Financial Switch for ATM’s

National Payments Corporation of India, to develop a robust retail e-payment system

Base regulations for mobile payments, prepaid cards and internet commerce

EFT at national level Card payments in government

benefit schemes Imaging and cheque truncation;

E-Cheques


Reducing Currency in Circulation

16

Source: Indian Banks Association

12.2 11.8

11.8 11.5

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Brazil

Russia

India

Indonesia

China

S.Africa

Turkey

Currency in Circulation/ GDP

2013

2012

2011

2010

Currency in circulation to GDP ratio in India is one of the highest in emerging economies, implying large share of cash transactions. This ratio has been on a downtrend for the last 3 years


Mobile Banking: Exponential Growth

17

Source: Indian Banks Association

Despite a very high mobile density, the potential for offering financial services is largely yet untapped

— Over 900 million mobile users in the country but only 36 million mobile banking customers

Underscores the need for active collaboration between banks and telcos

— Irrespective of the channel through which such services are provided, such as, SMS, applications, USSD

Regulatory measures

— TRAI has set the ceiling tariff for USSD-based mobile banking services

— RBI has taken steps to provide accessible, convenient as well as cost effective services to mobile banking customers

13 23 36

18

60

224

0

50

100

150

200

250

-

5

10

15

20

25

30

35

40

FY12 FY13 FY14

No of Users (mn) Transaction Value (INR bn)


3 SECTION Automated Teller Machines (ATM)


75,645

96,742

116,378

162,453 173,697

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2011 2012 2013 2014 Oct-14

Number of ATMs in India

Overview

19

Low Penetration of ATMs Overview

Total number of ATMs in India stood at 173,697 in Oct 2014, implying a CAGR of ~29% in 2011-14 period

Lowest penetration of ATMs among the emerging economies with 138 ATMs per million people

Average number of ATM’s per million people in key cities was 206 against national average of 59, indicating disparity between rural and urban areas

SBI is the dominant player in the industry accounting for 26% of the total number of ATMs

Growing Market Size Government Initiatives and Market Potential

Reduced fees for ATM transactions. For use of other bank’s ATM, first five transactions are free of cost post which nominal fee of INR 20/ transaction

Permitted banks to install off-site ATMs at centers/places identified by them, without need to take permission

PSBs outsourcing ATMs to private companies on a brown label model to scale up rapidly

RBI permitted White Label ATMs for better coverage in rural areas

Increased number of ATMs to drive demand for related services such as cash management services, maintenance of ATMs etc.

Source: RBI, Market Research. Note: Data for USA as on Dec 2009; Brazil and China as on 2010; Data for India as on Oct 2014

1,382

905

202 138

14,008

4,360

30,843

41,562

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

-

200

400

600

800

1,000

1,200

1,400

1,600

USA Brazil China India

Tran

sact

ion

s p

er A

TM p

er y

ear

Nu

mb

er o

f A

TMs

per

mill

ion

peo

ple

Number of ATMs per million people Transactions per ATM per year

April


SBI , 26%

Axis Bank, 8%

ICICI Bank, 8%

HDFC Bank,

7% Punjab National Bank,

5%

SBI Associates, 5%

Union Bank of India, 4%

Canara Bank, 3%

Others, 31%

Bank of Baroda, 4%

Market Players

ATM network of ~174,000 in October 2014

Source: RBI

Market Share

For Oct 2014

o SBI (excluding associates) holds 26% of Indian ATM network with 45,463 installed ATMs in Oct 2014; Associates of SBI hold another 5% of the market with 8,084 ATMs

o Growth of ATMs expected to sustain current momentum on the back of White Label ATMs being set up by private players

20


Traditional Model

• Banks set up the ATM infrastructure including the location, installation, interiors and security, among others

• The total cost incurred lies in the range of US$ 16,000 – US$ 20,000

• Bank manages the settlement and other banking processes, and charges for transactions outside its network

• Drawbacks

• Time consuming process of setting up an ATM

• Worries of daily management

• Higher capital expenditure and technology requirements

Brown Label Model

• ATM management is outsourced to a third party vendor; bank continues to manage the settlement processes

• Transaction-based model where the setting up and running cost is borne by the vendor who gets paid on a per transaction basis

• For transactions outside its bank’s network, a fee charged which is shared between the vendor and the bank (vendor keeps 70-80%)

• All banks are already using this method to expand their ATM network

White Label Model

• Non-bank entities can apply to RBI and set up, own and operate their own ATMs

• Operators do not have direct access to core-banking operations. Hence, they require a "sponsor bank“ to serve as the settlement bank

• WLA operators receive a fee (INR 15 for Cash Transaction and INR 5 for Non Cash Transaction) from the banks for the use of ATM resources by the banks’ customers. They will not be allowed to charge customers for transactions

ATM Business Models

21

Rising maintenance costs along with time consuming nature of the traditional model has made way for outsourcing of ATM operations by banks…


Major Players – ATM Management

22

Source: Aurum Research

Company Name Service Offering ATM Model

NCR Corporation ATM Manufacturing, ATM Management Brown Label

Diebold Systems ATM Manufacturing, ATM Management, ATM Security N/A

Wincor Nixdorf ATM Manufacturing, ATM Management N/A

FSS ATM Selection and Installation, Site Up keeping, Cash Optimization and Loading Brown Label

FIS Global End to end ATM deployment and Management Brown Label

Prizm Payments ATM Selection and Installation, Management of ATM network Brown Label, White Label

TATA Communications End to end ATM deployment and management, Card Issuance and Management

Brown Label, White Label

AGS Transact Technologies

End to end ATM deployment and Management Brown Label

Euronet India Transaction Processing Services, ATM operations and Management, Field Services

Brown Label

Electronic Payments and Systems

End to end ATM deployment and Management Brown Label

BTI Payments End to end ATM deployment and Management White Label


Aurum View on ATM Segment (1/2)

23

Non-Core Activity

for Banks

Banks are increasingly realizing the efficiencies specialized ATM operators bring to the table and how outsourcing eliminates needless coordination

An efficient ATM network lowers customer visits to branches and plays a key role in user convenience and stickiness

ATM is an investment heavy segment with each ATM requiring an average capex of INR 5-7 lakhs

A 20% annual growth (30,000 ATMs) translates into an investment potential of INR 15,000 – 21,000 million annually

According to 2011 census, 41% of country’s population is still un-banked

As this population starts opening bank accounts and using debit cards, ATM segment will be the largest beneficiary

Government launched Pradhan Mantri Jan Dhan Yojana (largest financial inclusion scheme in the world) opening 115 million accounts by Jan 2015

Scheme covered 99.74% of the households that were outside the banking system

RBI has been supportive in laying down a viable business model for White Label ATMs along with clear guidelines

Investment Intensive

Segment

Enormous Scalability

RBI/ Government

Initiatives


Aurum View on ATM Segment (2/2)

24

High Investor Interest

ATM segment has attracted the most private equity interest with large ticket investments in all ATM players including Prizm, BTI Payments, FSS, AGS Transact etc.

This interest is expected to increase with an investor friendly government and enhanced focus on financial inclusion

ATM companies are increasingly realizing the economic attractiveness of installing ATMs in Tier3/4 regions, as compared to higher competition and rental costs in Tier 1/ 2 cities

Increasing willing to use banking services in rural areas with comparable average daily withdrawals compared to cities

Favorable Economics

in Tier 3/4 regions

o Aurum believes ATM segment will be the first beneficiary of changing Indian demographics and increased penetration of banking services

o Efficiently run companies will continue to attract capital from the investors and addressable market is large enough for the players to co-exist

Bank ATMs in urban areas face stiff competition from other banks, resulting in sub-optimal volumes

Increasing trend of WLAs may lead banks to close down unprofitable ATMs, resulting in aggregation of demand from all banks for WLAs and better profitability

WLAs May Lead to

Volume Aggregation

Key to Profitability:

Location &

Strong Cost Control

ATM profitability is largely dependent on transaction volumes, which is a result of pre-installation assessment and location identification

Monthly operational expenses (for 1 ATM) excluding rent range from INR 20,000 to INR 30,000. Key to profitability is to maintain these expenses at the lower spectrum


4 SECTION Point of Sales (PoS)


Overview

26

Low Penetration of POS Terminals Overview

POS terminals stood at 1,111,576 in Oct, 2014, implying a CAGR of ~22% in 2011-14 period

Lowest penetration of POS per million people among the emerging economies, indicating large potential for growth

Low penetration attributed to insignificant size of organized retail (~7% of total market) and low penetration in rural India

Other reasons include low transaction volumes in rural areas and high network costs in urban centres

Total number of POS transactions stood at 128 million in Oct 2014, with a monthly transaction value of US$ 4.9 billion

Positive Macro Drivers

Organized retail and hospitality (premium hotels) is a key driver of POS transaction value

― Retail industry to grow at 20% CAGR to reach ~US$ 760 bn by 2015. Penetration of organized retail increasing from 7% in 2012 to 10% in 2015

― Travel and tourism segment expected to grow at 8.2% through 2015. Hotel segment to reach a market of US$ 14 billion in 2015

‘Rupay’ is expected to bring down transaction charges

POS terminals increasingly being viewed as a low cost channel for collection of bills and making mobile payments

Growing Market Size

Source: RBI, Analyst Reports. Note: Data for India as on Oct 2014, Other countries data as on Dec 2010

24,951

1,845 888

1,296

1,967

1,384

-

500

1,000

1,500

2,000

2,500

-

5,000

10,000

15,000

20,000

25,000

30,000

Brazil China India

Number of POS per million people Transaction per POS

595,958 667,963

913,867

1,076,311 1,111,576

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2011 2012 2013 2014 Oct-14

Pos Terminals in India

April


Acquirer Issuer Merchant Others

PoS Market in India

o Axis, HDFC and ICICI banks constitute ~85% of the installed POS market

o Currently, the typical acquirer fee is 0.2- 0.5%

o Leading credit card issuers include HDFC, Citibank, ICICI, SBI and Standard Chartered

o Leading debit card issuers include SBI, HDFC, ICICI, Axis and Citibank

o Interchange fee for debit cards is ~1.2%, while for credit cards the fee ranges between 1.2% -1.8%, varying by type of card

o Merchant fees typically range between 1.5% - 2.0% in most of the key markets. This fees has declined from the previous levels of 2.0%-2.5%

o Apart from the merchant fee, preferences for acquirer is also governed by allied services like working capital management, cash management etc.

o Key players providing outsourcing services for enablement and management of PoS terminals include:

• First Data

• Atos

• Smart Data

• HP Services

PoS Value Chain in India

27

Source: RBI, ATOS Worldline Industry Survey on Indian Payment Card Industry (2011), Analyst Reports


Axis Bank, 22%

ICICI Bank, 27%

HDFC Bank, 19%

SBI, 15%

Others, 17%

Market Players and Share

28

Market Share

For Oct 2014

Source: RBI

o Three private sector banks, ICICI, Axis and HDFC account for 68% of PoS market, with ICICI being the largest (27% share)

o Penetration in rural areas to increase on the back of low cost Mobile PoS terminals (INR 3,000-4,000/ terminal against 20,000 for normal terminal)

o Increasing adoption of card payment at PoS machines with rapid growth in debit cards


Emerging Opportunities

Installation Services

o Installation services deployment of PoS Devices at merchant locations

Third-party vendor provide the technology and transaction processing platforms, while the banks act as a sponsor for settlement of card transactions that take place on that PoS Network

In the race to cash upon the opportunities in the payment facilitation space, banks and third-party technology vendors are coming together to set up necessary infrastructure and create PoS networks of their own

Merchant Services

o Merchant services include merchant acquisition, merchant agreement and managing merchant profitability

Processing Services

o Processing services include authorization services and merchant settlement services

Maintenance Services

o Maintenance services include upkeep services for the PoS and other devices, as well as onsite training of the merchants with regard to use of the PoS devices for various transactions

Setting up PoS terminals helps strengthen the fee income component for banks

The merchant pays a commission of up to 1% per transaction, which is shared between the bank setting up the PoS terminal, the card issuing company and the payment gateway like Visa or MasterCard used

Expanding its PoS base helps banks to widen its customer base

As all participating merchants are required to open an account with the sponsor banks, setting up PoS terminals helps the to both widen its customer base and also improve its share of low-cost deposits

1

2

29

Source: RBI, ATOS Worldline Industry Survey on Indian Payment Card Industry (2011), News Articles


Mobile PoS

30

Source: RBI, ATOS Worldline Industry Survey on Indian Payment Card Industry (2011), News Articles

Current Issues with Conventional PoS Major Players

Lack of profitability of Merchant Acquirers: Current MA model has low spreads, making it unviable to service small/ medium merchants

Poor use of technology: Business calls for extreme cost control and efficiency. However, most merchants are used to technicians doing site visits to perform simple upgrades

High-cost POS devices: India is a country with majority of low-ticket transactions. Addressing the market requires economic equations that are different from ones used in Western world

M PoS Advantages

Mobility and low cost

A business model which is suited to low ticket transactions and merchant & acquirer economics

Target markets for M-POS players are ecommerce, home delivery businesses – restaurants, taxi service providers, insurance agents, pathology labs and similar businesses

S No Company Investors Product

1 Ezetap Helion, American Express

Java, Windows and Android. iOS under development

2 M Swipe Matrix Partners, Axis Bank

Audio jack plug in machine. Java, iOS, Android app support

3 MOSAMBEE SIDBI Ventures Card reader, audio jack plug in

4 MRL POSNET

NA Android only. Touch screen reqd. PIN based not supported.

5 Mobi Swipe One97 Mobility Fund

Android only. iOS and Windows under development


Aurum View on POS Segment

31

Conventional POS

Suited to

Large Merchants

Conventional POS machines cost between INR 20,000-25,000 per terminal. This cost along with 1%-2% of transaction value makes economic sense for larger merchants who have bigger transaction volumes

Aurum sees constrained growth in the conventional POS market, with majority of merchants eliminated by high cost structure

Low upfront investment (INR 2,000-3,000) reduces the payback period for the merchant significantly

Mobility is also a key advantage with booming e-commerce market and increasing preference towards home delivery for variety of goods

Merchant acquirers, even in M-PoS operate on wafer thin margins

Only way to recover high marketing and distribution costs is through achieving economies of scale in transaction volumes

Distribution presents a high barrier to entry and increases the gestation period significantly

Aurum believes the market to be dominated by 2 largest players in the near term

Ezetap and M Swipe being first movers and with robust investor backing are best positioned to dominate the market

New players with innovative allied products might generate investor interest

Mobile PoS

Addressing Issues

Distribution Reach

is the Key

Early Movers to

Have Advantage


5 SECTION Cards


Debit Cards


Debit cards in India have experienced a eight fold increase in the last 8 years and are expected to grow exponentially in the near term

50 75

102 137

182 228

279

337

400 442

2006 2007 2008 2009 2010 2011 2012 2013 2014 Oct-14

CAGR 2006-14: 30.0%

In Millions

Outstanding Debit Cards

Debit Cards – Overview

34

Source: RBI

With proportionate growth in volume and value of POS transactions Debit card growth has registered a CAGR of ~30% over

the past 8 years and is likely to moderate to 20% growth over next 3 years

This is attributed to

— Opening of new bank accounts to the tune of 20-25 mn annually

— Additional 20 - 25 mn existing account holders are being issued debit cards each year

Growth is mainly because of banks promoting debit card spends by offering incentives like cash back and loyalty rewards

1.9 2.8 4.1 5.9 7.3 9.2 11.6 15.2 17.4

67 97 147 170 212

265

329

543 675

-

100

200

300

400

500

600

700

800

0.0

5.0

10.0

15.0

20.0

2006 2007 2008 2009 2010 2011 2012 2013 2014

Transaction Value (US$ bn) Transactions (mn)


SBI , 29%

Axis Bank, 3%

ICICI Bank, 6%

HDFC Bank, 4%

Punjab National Bank, 6% SBI Associates,

8%

Union Bank of India, 3%

Canara Bank, 5%

Bank of India, 5%

Bank of Baroda, 4%

Others, 27%

Market Players

Source: RBI, Analyst Reports

Market Share

For Oct 2014

o State Bank of India emerged as the leader with a card base of 127 million, accounting for 29% share

o Punjab National Bank is in the second position with 28 million debit cards followed by ICICI with 24 million cards and Bank of India with 21 million cards in the market

35


Credit Cards


Number of outstanding credit cards has reduced in the past few years

23 28 25 19 18 18 20 19

7

10 11

10 13 16 25

29

0

5

10

15

20

25

30

35

0

5

10

15

20

25

30

2007 2008 2009 2010 2011 2012 2013 2014

Outstanding Credit Cards (mn) Transaction Value (US$ bn)

Outstanding Credit Cards and Aggregate Spending

Credit Cards – Overview

37


The number of credit cards in circulation declined significantly after the financial crisis (2008) due to concern for bad debt and recovery

Banks have been closing inactive and unproductive accounts to reduce maintenance cost

Despite decrease in outstanding cards, transaction value has been unaffected due to closing down of inactive accounts

Moderate growth of ~15% is expected in the near future owing to favourable macroeconomic parameters

SBI , 15%

Axis Bank, 8%

ICICI Bank, 17%

HDFC Bank, 28%

CitiBank, 12%

Standard Chartered Bank,

6%

Others, 16%

Market Share

For Oct 2014 The Indian credit card segment is dominated by private

sector banks

HDFC Bank is the market leader with a market share of 28% on the back of its aggressive approach

ICICI Bank has adopted a cautious approach in the last few years and has a card base of 3.3 million as on Oct 2014 with a market share of 17%.


Lowest penetration per million people

Growth Opportunity

38

Source: RBI, Analyst Reports; Note: Data for USA is as on December 31, 2009; For Brazil and China as on December 31, 2010; For India as on Oct 2014

3,603

908

172 15 0

1,000

2,000

3,000

4,000

USA Brazil China India

Credit Cards per million people ('000)

Rising Annual Transaction Value per Credit Card

1,750 1,140 1,531 0

500

1,000

1,500

2,000

USA Brazil India

Annual Transaction Value Per Credit Card (US$)

Drivers for Future Growth

Increasing per capita Income and growing consumption

Increasing net worth of the affluent class in India

— Credit card ownership amongst the affluent class is the lowest in the world

— Industry sources estimate that ~20% of the affluent people have credit cards in India compared to over 80% in countries, such as the US, the UK and Hong Kong

Favorable RBI Guidelines

— No regulatory restrictions on issuing credit cards for foreign banks, as opposed to commencing banking operations

— Enhanced security measures:

o All banks have migrated to EMV Chip and PIN based cards

o These cards are more secure against credit card fraud

— This will significantly help in consumers confidence and lead to an increasing number of transactions


Prepaid Cards


2%

98%

27%

73%

87%

13%

India is primarily a cash market, with its prepaid payment cards segment still being at a very nascent stage

4 6 8 11

15 22

30

42

59

2009 2010 2011 2012 2013 2014 2015 2016 2017

CAGR 2009-17: 40.0%

In INR Billion

Indian Prepaid Card Market In 2010, Visa conducted a research across six major cities in India, namely Bangalore, Chennai, Delhi, Hyderabad, Kolkata and Mumbai, to investigate the awareness and usage of prepaid cards among Indian consumers

Prepaid Cards Credit Cards Debit Cards

Yes

No

Only 2% of the respondents owned prepaid cards, compared to 27% and 87% of the respondents owning credit and debit cards respectively

o With the benefits like availability, cashless transaction and convenience of usage, the prepaid cards present a good opportunity as a new mode of payment to the Indian economy

o Prepaid cards are issued by two different models:

• Bank-led Model: Under this model, cards are issued by banks and distributed through their branches or through retail agents

• Non Bank-led Model: Under this model, cards are issued by independent entities through its network of retail agents

Prepaid Cards – Overview

40

Source: BCG Report on Prepaid Cards Market, ATOS Worldline Industry Survey on Indian Payment Card Industry (2011), VRL Report on Indian Prepaid Cards Market (2011)


Indian Prepaid Card Market – Market Segmentation

The Indian market is largely dominated by payroll cards, with the top three players controlling more than 70% of the prepaid card market

Payroll Cards, 34%

Travel Cards, 24%

Multi-Purpose

Cards, 22%

Remittance, 14%

Other, 6%

Axis Bank, 39%

ITZ Cash, 22%

ICICI Bank, 16%

Others, 23%

Major Players

o Axis Bank is the market leader in the overall prepaid card market

o Itz Cash is the leader in the multipurpose cards segment and also the largest firm in non-bank category for prepaid cards

Regulatory Environment

o Current regulations benefit the banking players as non-banking players are not allowed to issue open-loop prepaid cards

• Non-banking institutions can only launch semi-closed prepaid cards which cannot be used at ATMs or at bank counters for cash withdrawals

~5% of the multi-purpose segment is accounted by gift cards

Market Segmentation

41

Source: BCG Report on Prepaid Cards Market, ATOS Worldline Industry Survey on Indian Payment Card Industry (2011), VRL Report on Indian Prepaid Cards Market (2011)


Prepaid Cards: Current Usage & Future

42

Close Ended Semi Close Ended Open Ended

Traditional Uses

Calling Cards Mobile refill coupon Gift Vouchers Fleet/Fuel Cards

Meal Coupons Gift Vouchers

Travelers' Cheque

Modern Uses

Virtual Calling Cards DTH Subscription Toll Cards Transit Cards Online Gaming Cards

Online Services Mobile Services Gift Cards Food Cards

Travel Cards Payroll Cards No-frills A/c Card

Future Uses

Government Payments Virtual Toll & Transit Gift Cards Health Cards Insurance

Virtual A/C Retail Payment Multipurpose Toll Multipurpose Transit Hybrid Cards

G P R Cards Govt. Reimbursements Hybrid Cards Cobranded/White-

label


Emerging Opportunities and Challenges

Potential Opportunities in the Indian Prepaid cards market

• With government’s focus on financial inclusion and adoption of prepaid cards across various sectors like education, tourism, transit ticketing, the segment is poised to witness robust growth

• Recently RBI doubled the maximum prepaid card limit to INR 1 lakh stored value

Public sector: One of the potential opportunities can be the use of prepaid cards for paying wages in government welfare schemes like NREGS

• Governments in most of the major developing economies are beginning to use prepaid cards for making payments such as payroll, unemployment benefits, pension payments, disability benefits, disbursements and food vouchers

43

Challenges

• Awareness about prepaid cards is still at a very nascent stage which creates adoption barriers

• Scalability of such instruments is an issue for non banking entities as distribution reach is one of the major determinants of success

• Long gestation period due to large initial investment in establishing reach

• Regulatory challenges as no retailer can on its own have a prepaid card without partnering with a bank

• Escrow requirements and eligibility to issue various type of cards presents a challenge for non-bank players


Aurum View on Cards Segment

44

Debit Cards to

Show Robust Growth

Debit cards are the foundation on which growth prospects of other sub-segments hinge

The historical growth momentum (30% annual growth) is expected to sustain with more population served by banking services and government’s focus on financial inclusion

With growing middle class and disposable incomes, Aurum believes transaction value over cards will increase non-linearly

This is expected to benefit all the related segments including ATMs, PoS, Payment Gateways, Mobile Wallets etc.

Government usage of prepaid cards in implementation of welfare scheme will be a key determinant of growth

High initial investment, user reluctance and RBI restriction on open loop cards to affect growth of non-bank entities, ItzCash being the only scalable player

Cards segment is dominated by Banks with some of the processing as well as reporting activities being outsourced

Increased focus by banks on getting the customers to transact outside the branch, saving costs

Increasing Transaction

Value

Prepaid Cards to

Grow,

Albeit Challenges

Segment Dominated

by Banks


6 SECTION Electronic Payments Market


Large Value Settlements & Online

Payment Gateways


Electronic Payments – Overview

Payment Mode NEFT/RTGS, ECS (Credit)

Service Provider

Users

Business Transactions Collections Retail Payments

Electronic Payments Market in India

ECS Debit E-Commerce

o 161 banks enabled with NEFT facility

o 177 members enabled with RTGS facility

o 91 ECS (Credit) centres managed by RBI and other public sector banks

o NEFT/RTGS: Used for inter corporate money transfers of significant size

o ECS (Credit): Used by Banks/ Government entities to make monthly salary payments

o 90 ECS (Debit) centres managed by RBI and other public sector banks

o Used for payment of utility bills like telephone and electricity

o Leading online payment gateways include CC Avenue, Citrus, Emvantage

o Leading payment aggregators include Bill Desk and Tech Process

o Used for making online retail purchases

47

Source: Analyst Reports


Transaction Volumes and Values (1/2)

NEFT Transactions

FY Number of Transactions (in million)

Aggregate Transaction Value (in US$ billion)

Average Transaction Value (in US$)

2008 13 28 2,108

2009 32 50 1,567

2010 66 82 1,235

2011 132 188 1,419

2012 226 358 1,584

2013 394 483 1,228

2014 994 1,062 1,069

ECS (Debit) Transactions




2008 127 10 77

2009 160 13 84

2010 149 14 93

2011 157 15 94

2012 164 17 103

2013 177 18 102

2014 213 25 119

National Electronic Funds Transfer (NEFT)

o This is a nation-wide system that facilitates electronic transfer of funds from any bank branch to any individual, firm or corporate in the country

o There is no value limit on the amount that can be transferred through NEFT

Trend

While the aggregate value for NEFT transactions has grown at a CAGR of 83% during 2008-14, the average transaction value has declined at a CAGR of 11% during the same period

Source: RBI

Electronic Clearing Services (Debit)

o This mode is largely used to collect periodic or repetitive payments from a number of customers

o There is no value limit on the amount of individual transactions

Trend

The aggregate and average value for ECS (Debit) transactions has grown at a CAGR of 9% and 8% respectively during 2008-14

48


Transaction Volumes and Values (2/2)

ECS (Credit) Transactions




2008 78 17 199

2009 88 20 221

2010 98 24 240

2011 117 36 310

2012 121 37 306

2013 122 30 241

2014 127 43 337

Electronic Clearing Services (Credit)

o This mode is used for making bulk or repetitive payments to a number of beneficiaries

o There is no value limit on the amount of individual transactions

Trend

The aggregate and average value for ECS (Credit) transactions has grown at a CAGR of 17% and 9% respectively during 2008-14

E-Commerce Market in India E- Commerce: Key Trends

o In just 5 years, e-commerce market has grown fivefold from US$ 2.5 billion in 2009 to US$ 13 billion in 2013

o India boasts of the third largest Internet user base globally, estimated at 213 million in 2013 and expected to reach 564 million by 2020

o Combination of a large user base and low penetration is resulting in high growth for e-commerce in India

o Indian e-tailing market is expected to follow Chinese footsteps, growing to US$ 60 billion by 2020

49


213 261

324

564

2.2 3.9 7.2

60.2

0.0

20.0

40.0

60.0

80.0

0

200

400

600

CY13 CY14 CY15 CY20Internet Users (mn) E Tailing (US$ bn)


Major Payment Gateways

Leading Companies

Company Name Credit Cards supported

Investors

CC Avenue Visa, MasterCard, Amex, Diners, JCB None

Citrus Visa, MasterCard, American Express, RuPay Sequoia, Econtext Asia, Beenos Asia

Emvantage Visa, MasterCard, American Express, RuPay None

PayU Visa, MasterCard, Maestro, American Express, Diners Club

Backed by Nasper Group

Direcpay.com Visa, MasterCard, American Express, Diners Club Backed by Times of Money

EBS Visa, MasterCard, Maestro, American Express, Diners Club, JCB

Backed by France based Ingenico

Atom Visa, MasterCard, Maestro, American Express, Diners Club, JCB, RuPay

Backed by Financial Technologies Group

First Data (ICICI) Visa, MasterCard, RuPay NA

HDFC Visa, MasterCard, Diners Club, RuPay NA

50



Mobile Wallet


Mobile Wallet: A New Way to Pay

52


Prepaid instruments that involve the holder paying in cash for a corresponding amount of credit to be “loaded” onto his mobile

Stored credit can then be used for the purchase of goods and services or for the transfer of funds

Lack of awareness and skepticism around the new concept

High marketing costs to create a consumer brand of trust

Low entry barrier resulting in wafer thin margins

Stringent policies on restriction of cash-out facility

Alternate channels of money transfer and other applications

Challenges

M-Wallet market estimated at INR 3,500 mn in 2014 and is estimated to grow 3 fold to INR 12,100 by 2019

Rapid growth expected on the back of increasing demand for smartphones and rising mobile internet users (92% growth in 2013)

Alternate to existing prepaid cards and traditional ways on online payments

38% market share accounted by money transfer businesses, followed by recharge at 30% and bill payments and utilities at 12%

Size and Growth


Market Players

53


Company Description Investors

Oxigen Services Limited Recharge, bill payments, ticketing, insurance and banking services Microsoft

ZipCash Card Services Pvt. Ltd. Online shopping, utility payments, DTH, mobile recharge, m-vouchers, gift vouchers

NA

One Mobikwik Systems Pvt Ltd Mobile recharge, DTH, data cards, Utility bills, shopping Unnamed Investor

My Mobile Payments Limited Mobile/ DTH Recharge, utility bills (like electricity and gas), airline, bus and movie tickets

Calpian

Citrus Payment Solutions Easier checkout on variety of online shopping points. Credit, debit, bank account can be linked to citrus account

Sequoia, Econtext Asia, BeenosAsia

CanvasM Technologies (Mahindra)

Mahindra's M-VAS venture NA

Airtel M Commerce Services Airtel Mobile wallet venture NA

Atom Technologies Ltd Payment solutions over web, IVR, mobile, mobile wallet and prepaid cards Financial Technologies

MMP Mobi Wallet Payment systems Ltd

100% subsidiary of Tata Teleservices. Transfers, shopping, utility bills etc. NA

Idea Mobile Commerce Services Ltd

Idea mobile wallet venture NA

Mobile Commerce Solutions Ltd (Vodafone)

Subsidiary of Vodafone. Product called MPesa NA

One97 Communications Ltd (PayTM)

Entire spectrum of mobile shopping and digital products Alibaba, SAIF

PayMate India Ltd Variety of payments and transfers to merchants/ beneficiaries; Multiple access channels like SMS, IVR, Smart & Feature phone applications, NFC, USSD, and mobile web

Lightbox Ventures


Aurum View on Electronic Payments (1/2)

54

Online Payment

Gateways:

To Lead Growth

Online payment gateways form the back bone of the e-commerce revolution that we are witnessing

Aurum expects transaction volumes to grow exponentially as more users transact online

Although existing large players are better positioned to take advantage, there is scope for newer players offering better customer experience and related features

Segment will continue to attract investor interest with existing players leading large ticket size fund raisings

Aurum believes mobile to be the focal point of the current ‘Internet Revolution’

Nascent stage of the industry and low customer awareness are some of the challenges to be overcome

High marketing budgets to build a trusted consumer brand will result in 2-3 players dominating the market (Paytm, MobiKwik)

Business and ECS (debit/credit) transactions are driven by banks, with solutions provided by non bank entities

Aurum believes it to be a bank dominated domain with minimal role for non-bank payment companies

Payment Gateways:

Continued Investor

Interest

Mobile Wallet:

A Segment to

Watch Out

Large Value

Settlements:

No Play for

Non-Banks


Aurum View on Electronic Payments (2/2)

55

Loyalty: An Upcoming

Segment

Loyalty programs in payment products is emerging as a high growth segment, attracting investor interest

Banks placing large importance to loyalty to maintain customer stickiness

Loylty Rewardz is a dominant player controlling over 60% of the market in cards loyalty programs

Global loyalty players are also eyeing India to participate in this nascent high growth market. Aimia signed an exclusive contract with Axis Bank to manage its rewards program

Payment solutions represent an important allied activity for e-commerce companies. Aurum believes e-commerce players will acquire well run payment companies to develop in-house capabilities

Aurum believes it to be a bank dominated domain with minimal role for non-bank payment companies

Consolidation on

the Cards

o Increasing shift towards online is expected to result in high growth for this segment

o In-line with government’s vision to move towards ‘cashless’ economy

o Aurum expects large number of software product start-ups to come up in this space, resulting in increased fund raising activity


7 SECTION Payment Banks: Aurum View


Payment Banks: Moving towards Financial Inclusion

57


No frills banks where people can open current and savings accounts but the balance can't exceed INR 1,00,000

Banks can issue ATM and debit cards but not credit cards, and they can't give loans

Targeted to provide payments and remittance services to a migrant workforce and low-income households

Can become a Business Correspondent of another bank and provide all products that BCs can offer

Can undertake other activities such as distribution of mutual funds, pension products, insurance products etc. subject to RBI approval

To invest minimum 75 per cent of its "demand deposit balances" in Government securities/Treasury Bills with maturity up to one year

Hold maximum 25% in current and time / fixed deposits with other scheduled commercial banks for operational purposes and liquidity management

Revenue from investment income in securities and transaction fees

Overview Applications to RBI and Major Players

RBI released final guidelines for Payment Banks on Nov 27, 2014 and last date for applications was decided as Feb 2, 2015

A total of 41 companies applied for the license. Some large names being:

— AB Nuvo Limited (with subsidiary Idea Cellular)

— Airtel M Commerce (with Kotak Mahindra Bank)

— Cholamandalam

— Reliance Industries (with SBI)

— Vodafone

— Tech Mahindra

— Videocon D2H

— ItzCash

— FINO Paytech

— Citrus Payments

— One Mobikwik

— Oxigen(with RBL Bank)

— Future Group (Probable partner IDFC)


Success Stories and Aurum View

58

Global Success Stories

M-Pesa

— Mobile payments service launched in 2007 by Safaricom (Vodafone owns 40% ) in Kenya has been a runaway success

— Over US$1 billion monthly money transfers through M-Pesa in Kenya with nearly 13 million customers. In Tanzania, 5 million people do transactions worth US$ 1.5 billion

— Both Safaricom and Vodacom (Vodafone owns 65% ), the mobile operators offering it in Kenya and Tanzania, earn about 20% of revenues from it

Aurum View

Telecom players with ready distribution reach in partnership with banks are best positioned to capitalize on this opportunity

New business model has concerns about profitability and competition from alternate channels/ other players

High volumes, low transaction size model to require best use of technology for cost efficient operations

Attracting deposits might not be easy as Payment Banks will compete with Commercial Banks which can offer higher savings rates (already present in rural areas with Jan Dhan Yojana)

Brand building and customer education to require large upfront investments

Aurum has a positive long term view on the segment as Commercial Banks struggle to match the reach and low cost structures that these new entities might offer


8 SECTION Past Transactions


Transactions in Payment Services: Aurum View

60


Payment services has gone through a subdued period in terms of investment activity in the last 2 years, with intense competition resulting in wafer thin margins

Most investments have been focused on specific segments including ATMs, M-PoS and Payment Gateways

Companies have not performed as per investor’s expectations and exits have been few. Only Prizm Payment transaction provided a healthy exit for the existing PE/VC funds

Large corporate houses have preferred to build businesses organically as opposed to acquiring an existing player, due to high valuation expectations

With the new government at centre and renewed investor sentiment, the space has already started generating more buzz in investor circles

Segment-wise Aurum view:

— ATM: To see large ticket size fund raisings. Existing players to scale up

— PoS: M-PoS to generate investor interest. Two players, Ezetap and M Swipe to absorb majority of funding

— Cards: Loyalty to be a segment to watch out for. Interest in prepaid cards dependent on govt. initiatives

— Electronic:

o Payment Gateways: Online Payment Gateways to attract maximum interest. Larger players, e-commerce/ payment companies might look for acquisitions

o M Wallet: Top 2 players to dominate the market and attract investor interest. Smaller players might get consolidated


Private Equity Transactions (1/4)

61


S No. Date Company Investors Amount (US$ mn) Segment

1 26/11/2014 PayMate India Lightbox Ventures I 30.0 Electronic

2 13/10/2014 Financial Software & Systems

PremjiInvest 57.2 ATM

3 02/09/2014 ItzCash Card Unknown Investor 15.0 Cards

4 07/07/2014 TranServ Private Limited India Evolving Fund,Nirvana Venture Advisors

3.7 Cards

5 21/03/2014 Innoviti Embedded Solutions

HNI Investor 1.0 Electronic

6 21/02/2014 Ezetap Mobile Solutions Helion Advisors ,Berggruen Holdings Inc

7.3 POS

7 08/01/2014 Mswipe Technologies Axis Bank Limited,Matrix Partners India Fund II

NA POS

8 19/12/2013 Electronic Payment and Services

Asia Participation BV (Affiliate of FMO)

5.3 ATM

9 09/12/2013 Citrus Payment Solutions Sequoia Capital India,econtext Asia,Beenos Asia

5.5 Electronic

10 11/10/2013 BTI Payments ICICI Venture 19.3 ATM

11 19/08/2013 Electronic Payment and Services

Aavishkaar India NA ATM



62



12 15/04/2013 Transaction Solutions International

CX Partners 22.5 ATM/POS

13 04/04/2013 Synergistic Financial Networks Private Limited

SIDBI 0.7 POS

14 10/01/2013 Mswipe Technologies Private Limited

Matrix Partners India 0.8 POS

15 07/12/2012 Fortune Payment Solutions

Bessemer Venture Partners,Kae Capital

0.3 Electronic

16 21/11/2012 MobiSwipe Technologies Private Limited

One97 Mobility Fund NA POS

17 07/11/2012 Ezetap Mobile Solutions Private Limited

Peter Thiel,David Sacks,Chamath Palihapitiya,Nicolas Berggruen

3.5 POS

18 05/10/2012 Electronic Payment and Services Private Limited

Aavishkaar Goodwell India Microfinance Development Co. Limited - II,Aavishkaar India II

4.0 ATM

19 22/08/2012 AGS Transact Technologies

Actis Capital LLP 39.6 ATM

20 17/08/2012 Beam Money Private Limited

Gray Ghost DOEN Social Venture Cooperative

0.9 Financial Inclusion

21 10/08/2012 Vortex Engineering Tata Capital 9.9 ATM



63



22 08/06/2012 Citrus Payment Solutions Private Limited

Sequoia Capital India 1.6 Electronic

23 04/04/2012 IndiaIdeas.com Clearstone Venture Partners,TA Associates Advisors Private Limited

22.0 Electronic

24 03/04/2012 My Mobile Payments Calpian Inc 0.6 Electronic

25 12/01/2012 Zaak ePayment Services Sequoia Capital 0.5 Electronic

26 10/01/2012 FINO PayTech International Finance Corporation NA Financial Inclusion

27 15/12/2011 Vortex Engineering Aavishkaar India 6.5 ATM

28 01/08/2011 Ezetap Mobile Solutions Sequoia Capital India 8.3 POS

29 11/07/2011 Eko India Financial Services

Creation Investments Social Ventures Fund I,Promus Equity Partners

5.5 Financial Inclusion



64



30 07/07/2011 FINO PayTech Blackstone Advisors 33.0 Financial Inclusion

31 07/07/2011 Vortex Engineering International Finance Corporation 2.7 ATM

32 09/06/2011 AGS Transact Technologies

TPG Growth 32.3 ATM

33 29/03/2011 Prizm Payment

Axis Private Equity Limited (fund),Sequoia Capital India,Saama Capital India Advisors LLP

7.7 ATM/POS


M&A Transactions

65



1 13/10/2014 Cobboc Private Limited (Eashmart)

Payu Payments Private Limited NA Electronic

2 09/09/2014 ISS - Cash Management Uni

SIS Prosegur Holdings Private Limited

24.9 ATM

3 19/05/2014 ElectraCard Services Private Limited

MasterCard Inc,Mastercard Incorporated

NA Electronic

4 21/03/2014 Ezetap Mobile Solutions Private Limited

American Express NA POS

5 03/03/2014 C-Sam (India) Private Limited

Mastercard International Inc - Electronic

6 26/11/2013 Prizm Payment Services Private Limited

Hitachi 246.1 ATM/POS

7 04/05/2012 TimesofMoney Limited Network International LLC - Remittances

8 23/09/2011 E-Billing Solutions Private Limited

Ogone Payment Services - Electronic


1. Digital India: Emerging Challenges & Opportunities for the Banking Sector, Indian Banks Association

2. Mobile Payments And Mobile Banking In India: Regulatory Developments And Challenges, Majmudar & Partners International Lawyers

3. India Internet Sector, Credit Suisse

4. Indian Payment Industry – 2012, Edelweiss

5. Data: Reserve Bank of India, National Payments Corporation of India

Bibliography

66


Aurum was established, as a mid-market focused; transaction oriented; investment banking firm, by a team of professionals with

decades of experience in investment banking, private equity and general management.

Aurum advises clients on M&A, Divestitures, Fund Raising and Restructuring, focusing on sectors that are in the high-growth

trajectory. The Aurum team’s experience in handling large and complex transactions helps in accelerating the speed of response

that the Client needs to demonstrate, in order to close transactions in a competitive environment. We have the ability to structure

deals derived from understanding the client's strengths and constraints, further enabled by understanding of market trends and

relevant regulatory environment.

www.aurumequity.com

For any further queries and information, please write to us at [email protected]

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