"The first product we created was peer-to-peer payments app. It was the first network and bank agnostic payments app in India," says Varun Rathi, Co-Founder at Happay, talking about how the company evolved from a B2C to a B2B solution in February this year. The change in focus seems to have paid off, as the three-year-old finch startup is clocking a transaction volume of one crore rupees a day, Rathi says, with over 500 customers using its service.
The early version of Happay that Rathi is talking about, was comparable with Axis Bank's Ping Pay, targeted at students and young professionals. The app reached 200,000 registered users, but founders Anshul Rai and Rathi weren't convinced if the pain point was worth solving.
"With a wallet, I can only do so much. I can't go to say, Nature's Basket, and pay using my phone. That was yet to come, and you see it today, with Paytm doing a lot of partnerships. That is something where, I have to partner with everyone in the world," Rathi says. "At the same time, a lot of businesses approached us to help them with their vendor-to-vendor payments or employee reimbursements. That is what got us thinking."
After speaking to around 30-40 customers in the corporate segment, Rathi realised that the SME segment in India lacked an off-the-shelf solution to automate expense reporting. "In the last 15 to 20 years, all the innovation has been happening in the B2C segment," he explains. "You can see the Googles and the Apples of the world trying to go after NFC and wallet solutions, but for businesses, what they have been getting is just a current account."
Happay's solution, targeted at SMEs - companies in the employee range of 50 to 1,500 - is to give companies a new card for their employees. It's actually based on a software layer on top of a normal prepaid Visa card, which can be remote controlled through a Web platform and a mobile app. The dashboard and admin app provide real-time monitoring and tracking capabilities to business owners, and take the pain out of the conventional method of filing reimbursements for both the employee and finance team.
According to startup tracker Tracxn, while there are expense management tools built into many accounting software, there are no other companies in India who are doing business expense management that is compatible with a Visa/ Master card. Globally comparable players in this space are San Francisco-based Karmic Labs, whichoffers Dash, a SaaS-based product linked to a prepaid Mastercard, while Bento, another Mastercard solution, offers a 'team' package of five cards for $29 a month. New York-based PEX Card charges a one time setup fee of $49.95, and a monthly fee of $7.50 per card. While Happay hasn't disclosed its pricing structure, Rathi says that its pricing currently works out to a monthly expense of Rs. 200 per card.
"You don't have to buy software separately, and a payments solution separately. We're combining the two so you don't have to deal with two separate things," Rathi elaborates. "The problem lies in feeding all the data, and it's been a core problem for decades. While solutions have been made on making data entry easier, very few have tried to eliminate it. This is the problem we've solved."
Happay's team went deeper into payments by partnering with Visa and Ratnakar Bank, and built a complete expense management solution linked to a prepaid debit card. According to Rathi, this is a very tech heavy product that took his team more than ten months to build. "The backend platform which can communicate with Visa is not a small thing to do for a startup," he says.
Happay integrates with accounting software like Intuit Quickbooks, Tally, and SAP-based ERP solutions as well, Rathi adds. "From expense to accounting, this process is completely automated, without requiring any manual data intervention," he explains. "So your expenses are ready to be accounted today, which was never the case with any of the other available solutions."
Happay also incorporates a manual expense recording feature that lets employees fill in the details of a offline transaction (such as an auto ride) by taking a picture of the meter to record the expense. The card also works online, in ATMs, and at POS terminals. The team has now applied for certification - which will take a few more months - after which the card can also be used internationally, Rathi says. That will expand the card's use case to cover a company's marketing spends on international advertising platforms from Facebook and Google. Generally, employees have to use their personal credit cards, he explains, which is not popular.
Rathi tells us that many of Happay's early customers are other startups, who value speed and flexibility. So, for example, hyperlocal delivery startups Grofers and TinyOwl both use Happay's cards; their delivery teams use the cards to pay at the shops to buy products that they then bring to customers. Other customers include Habanero and Subway, which manage multiple retail outlets across the country, and need operating cash on a day to day basis. Traditionally these firms used to send cash from the central office is instalments, which would be personally picked up. Happay's card-based solution means that they don't need to rely on cash all the time. Other business clients of Happay's are using the cards to pass on cash reimbursements for things like medical and fuel allowances - instead of having to submit your bills at the end of the month, you'd just need to use the right card to pay your bills.