“Built a massive network among retailers”

The clunky black point of sale (PoS) devices in retail outlets are now getting replaced with sleek white, touchscreen-based machines. Most versions also offer contactless payments using NFC (near field communications). And all that has happened, thanks to merchant commerce platform Pine Labs. The Noida-based firm has created an ecosystem where shoppers can swipe cards of multiple banks on a single terminal in a store. Of the 3-3.5 million terminals across India, 600,000 are owned by Pine Labs.

The company was founded by Rajul pumps were going digital, Pine Labs offered a solution for card-based payment in 1998. It was way ahead of the times. Over the years it moved from retailing petroleum products to digital payment solutions for retailers such as Future Group, Reliance and DMart. It was followed by a 0% instalment programme. That’s when we started to offer services to banks. We had built a massive network among retailers. When we got into payments, we went in with a software-first approach—one terminal should have 20 banks behind it, not just one. We built everything in the Cloud. Garg and Tarun Upadhaya in 1998. Both later sold their shares when Sequoia made its first investment in Pine Labs in 2009. Lokvir Kapoor was designated the founder of the company. He is currently the founder-director, while Amrish Rau is the CEO.

Backed by investors, including Sequoia, New Atlantic Ventures, Temasek, PayPal and Mastercard, Pine Labs has seen its valuation rise 3x to $3 billion in the last 18 months. In July, the company raised $315 million.

The Idea!

Amrish Rau: At a time when petrol pumps were going digital, Pine Labs offered a solution for card-based payment in 1998. It was way ahead of the times. Over the years it moved from retailing petroleum products to digital payment solutions for retailers such as Future Group, Reliance and DMart. It was followed by a 0% instalment programme. That’s when we started to offer services to banks. We had built a massive network among retailers.

When we got into payments, we went in with a software-first approach—one terminal should have 20 banks behind it, not just one. We built everything in the Cloud.

Early Struggle

We are among the lucky ones, because we built our company on profitability. We have been EBITDA positive for the last 10 years. We built our company on very solid grounds, without having to be over aggressive. We have had a safe, sound, secure journey.

Make Or Break Moment

First, Indian consumers started becoming comfortable making more purchases digitally, and second, banks wanted to come on our platform. We suddenly felt we have been able to put everything together — the retailer, merchants, banks and brands. Through the pandemic, cities have been impacted. In smaller towns people are buying products on instalments in a very large way. In July we did ₹3,000 crore of instalment-driven purchases on all our platforms.

The Business Model

We started off as a card-based payments and loyalty solutions provider for the petroleum retail industry. Around 2012 we pivoted to a one-point software-driven solution for consumers by partnering with banks and payment aggregators to ensure that our PoS (point of sale) terminals could process all forms of digital payments. As a result, by using one smart Pine Labs terminal, the store can cater to the needs of cards issued by a wide array of banks. So instead of getting an ICICI Bank terminal and an HDFC Bank terminal, the store can have one terminal for all banks.

Tech Challenge

Much of our focus has been on getting deeper into the country through small stores. As India went into a 21-day lockdown, stores suddenly got shut and business stopped. We had been working on an ePoS solution for some time. With no transactions happening and no clarity on when it would open, we got our team to accelerate the process. In less than a week we launched the Android edition of the ePOS app. There were over 4,500 downloads on day one itself. The app enabled contactless payment methods such as credit cards, debit cards, UPI and mobile wallets for small store owners.

HR Challenge

Our CTO who has been with us for nearly 16 years, has built a team largely out of IITians. His logic was that they have a deep understanding of technology and software. Now as we grow bigger we are looking beyond IITs. Many times people join because they want to work with a founder or a CTO. Some of the best people we have hired over the years are those who came with a mission.

Managing Investors

I found it extremely easy to manage investors. I have been in fintech, where tomorrow will always be better than today, and today will be better than yesterday. It is a huge market. Investors are willing to support you at all times. I have never come out of a meeting shaking my head and saying investors are being stupid. I have had a very lucky run with investors.

Marketing & Sales Lessons

The greatest sales lesson is that the quality of your product will always be the best indicator of the company. We have kept it simple. What we do on the technology side and the product side is good, so what you need on the sales side is only distribution. As long as the quality is great, the product will sell easily. When a client calls us and asks us to do a certain thing, our CTO will drop everything and do that first.

When Did You Think You Had Arrived?

That day is yet to come. We are happy to be fighting every day for our position in the market. Every month 150,000 terminals are being deployed in India and we are doing 25-30,000. This is another 10-15 year story. Out of 3-3.5 million terminals we have 500,000-600,000.

Riding Through Toughest Times

The initial few weeks of the first lockdown was the toughest phase. When everything was shut, there was hardly any traction on the network. Once the phased opening began, things started to improve. However, in the second phase, the impact has been lesser.

What Next?

We will be the biggest deployer of payment services — QR codes to tags to loyalty and gift cards. Our technology is very relevant in South-East Asia. We are going to S.E. Asia and West Asia. We are investing heavily in e-commerce as lots of retailers and businesses want to go online. We are going to different cities. As we grow bigger, we are doing lending related services to merchants; we are going into Internet payment gateways.