Online payment services provider PayU India has ventured into hardware devices by introducing its own point-of-sale (POS) machines as the Naspers-backed company anticipates the next wave of growth to come from small merchants adopting debit/credit card transactions.
PayU expects the new segment to generate revenue of about $50 million within 24 months and has set itself the target of selling a million POS machines in next three years. The company plans to take this product to other markets such as Central and Eastern Europe, Africa and Latin America by the end of the current financial year, a Livemint report said.
“People are moving towards omni-channel. Merchants want presence everywhere, right from online to social to offline. We have had a significant presence in online and now, we want to replicate it in offline. From device to transactions, we want to create an end-to-end solution,” said PayU India co-founder and chief executive Nitin Gupta.
PayU’s move to venture into hardware comes at a time when other payment solution providers such as Paytm, Mobikwik and Freecharge are trying to replicate physical transactions with mobile wallets and QR (quick response) codes.
However, Gupta believes that POS machines are here to stay and that mobile wallets will have a specific use case. “China grew to 22.82 million machines by end of 2015 from 15.93 million POS machines in 2014. We are expecting the Indian market to witness a similar growth trajectory,” Gupta added.
India currently has about 1.2 million POS machines and about 0.7 million small and medium merchants have access to these machines.
According to data released by the Reserve Bank of India in December 2015, India had about 644 million debit cards and 22.75 million credit cards. Gupta sees a massive opportunity in India’s 55 million small merchants that are yet to actively adopt to payments via debit and credit cards.