Lightspeed Venture Partners has led a Rs 50 crore second round of funding in Itz Cash Card Ltd, a multi- purpose pre-paid card company. Exisiting investors Matrix Partners India and Intel Capital also participated in the round. The funds will be used by Itz Cash Card to further expand into retail payment space, besides ramping up the product portfolio and diversifications.
The firm, which is part of the Subhash Chandra promoted Essel Group, raised $10 million from Matrix Partners and Intel Capital in 2007. Value card and payment firms have attracted funding from other players too. Another funded player in the space is Prizm Payments, which has
been backed by Sequoia Capital India. QuikCilver, which offers stored value cards, has also raised funding from Helion Ventures and Accel India.
Itz Cash was established in 2004 and has managed to reach an annual gross turnover of Rs 1,700 crore. The company offers prepaid cards offer cashless payment solutions for individuals and businesses. The company has tied up with IRCTC for rail booking, Municipal Corporation
of Greater Mumbai (MCGM) to facilitate online payment of property tax and water bills, among others. Itz Cash has a network of more than 5,000 merchants in 1800 Tier I & II towns.
“We believe there is significant growth potential for this product given that cash accounts for approximately 97% of the country’s retail payments, which exceed $500 billion,” said Bejul Somaia, Managing Director, Lightspeed Advisory Services India, who will also join the board of Itz Cash. “We have been looking to invest in financial services, especially businesses which are at an intersection of financial services and technology,” he added in an interview to VCCircle.
Technology Firms Target The Unbanked
Reserve Bank of India (RBI) deputy governor KC Chakrabarty recently told media that 60% of India’s population does not have access to formal financial service and that only 5.2% of villages have bank branches. Seeing this opportunity, many technology firms are looking to serve this sector. With new funding finalised, Itz Cash will also expand to serving the under-banked or unbanked population of India. “To have a credit or debit card, you need to have a bank account. This (Itz Cash Card) can be a payment method for people for people who don’t have bank accounts,” said Somaia.
Financial Information Networks and Operation (FINO), a micro banking firm addressing the bottom of pyramid customers, is another technology products firm serving the unbanked space. FINO makes smart cards and hand-held card readers, which help micro-finance institutions enable transactions.
Mobile payment firms are also setting their sights on the unbanked population. Mobile payment firms like Paymate India and Obopay are also targeting this population in markets like India, where mobile subscribers are rapidly increasing.